Fletcher Building's Long-Term Margin Improvement Opportunity Remains Intact, but We Don't See a Moat
We’re positive on no-moat Fletcher’s sale of its Formica business, with the deal adding approximately 5% to our fair value estimate. The sale represents a central component of Fletcher’s strategy to refocus on its core markets of New Zealand and Australia. Struck at a price of USD 840 million, the deal remains subject to regulatory approvals but Fletcher expects completion by year-end fiscal 2019. Fletcher also confirmed it would pay a first-half dividend but that in resuming dividends in fiscal...Fletcher Building is a holding company. Through its subsidiaries, Co. operates in six divisions: Heavy Building Products, which manufactures, distributes and markets heavy construction material; Light Building Products, which manufactures a range of building products for residential and commercial markets; Laminates and Panels, which manufactures and distributes decorative surface laminates; Distribution New Zealand and Distribution Australia, which consist of building, plumbing, pipeline and steel distribution businesses in Australia and New Zealand; and Construction, which is a general contractor in New Zealand and the South Pacific and a builder of residential homes in New Zealand.
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