NZ sharemarket drops 1.75% as Fisher & Paykel forecast weighs on market
The S&P/NZX 50 Index closed down 1.75% or 220.074 points, falling to 12,362.26, with 42,962,847 shares changing hands to the value of $154.15 million.
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NZ Herald
11 hours ago
- NZ Herald
Possible sale of Fletcher Construction end of a proud building era
The books are said to be a 'story of war and peace, of success and failure, and how New Zealand's premier builder coped in the face of many challenges'. Fletcher Construction may soon be sold and analysts suggest it could be worth up to $340 million. Photo / Getty Images Today's Fletcher Building is a shadow of the former Fletcher Challenge of the last century. And Fletcher Construction itself is a shadow of what the great company once was. Fletcher flagged the potential Fletcher Construction sale at its investor day on June 11 and again on July 22 in an NZX notice. Fletcher Construction is: Higgins, the civil construction company that Fletcher bought in 2016; Brian Perry Civil, bought by Fletcher in 1986; Fletcher Construction (major projects) division, part of the original 2001 float on the NZX. Fletcher Living, the company's home-building business, is not included in the sale. Fletcher Living doesn't come under Fletcher Construction. It is a separate division, headed by the accomplished, experienced Steve Evans, in that role for more than a decade. Andrew Reding heads Fletcher Building and is looking at divestment options for the Construction businesses. On the possible Fletcher Construction sale, CEO and MD Andrew Reding said in July: 'Given the quality and strong recent performance of our Construction businesses, and the role they will play in New Zealand's growing infrastructure pipeline, we were not surprised to receive inbound interest for them, which has motivated us to test whether there are attractive divestment options. 'No decision has been made to sell at this time, and we will carefully consider the value of any options presented from this process before deciding whether to move ahead.' The business says Fletcher Construction has 3700 staff working across the three brands. 'Since 1909, our people have planned, built, maintained and managed significant national infrastructure for the benefit of communities in New Zealand and the South Pacific. We have safety at our core and invest in innovation for the future,' Fletcher Construction said. In more recent years, Fletcher Construction had three jobs that caused problems: Auckland's new $1 billion-plus NZ International Convention Centre for SkyCity; Auckland waterfront's Commercial Bay for Precinct Properties; Justice & Emergency Precinct in Christchurch. In 2018, the Herald reported on 14 of 73 projects on its books that are loss-making or on watch. SkyCity Entertainment Group's NZ International Convention Centre has been a problem project for Fletcher Construction. Photo / Michael Craig Jobs had gone over the original bid cost and taken far longer than expected. Underbidding and lack of information flow to the board were two issues blamed then. The now former-CEO Ross Taylor said in 2018 that Fletcher Building would not be bidding for any further vertical construction work in New Zealand while it concentrated on completing existing projects. The company said at the time that the building and interiors market 'continues to be characterised by high contract risk and low margins', adding, 'we will no longer work in these conditions'. SkyCity is suing Fletcher Building and the Fletcher Construction Company for $330 million, saying it had taken 10 years instead of three to build the NZICC. The claim seeks damages for losses incurred by SkyCity arising from ongoing delays in the completion of the project, including those that resulted from the 2019 fire. In response, Fletcher said it had already flagged risks associated with the convention centre, it was committed to delivering the project and would vigorously defend itself. But SkyCity said the NZICC was now nearly six and a half years behind the contractually agreed delivery date of January 2019. Despite its problems, Forsyth Barr analysts have estimated Fletcher Construction could be worth $230m to $340m. More may be said about the sale at the company's annual results announcement on August 20. Anne Gibson has been the Herald's property editor for 25 years, written books and covered property extensively here and overseas.
NZ Herald
a day ago
- NZ Herald
New Zealand can absorb 15% tariff shock - ANZ group chief economist
Ultimately, that meant at worst a hit of 15% on 2% of New Zealand's total GDP, he said. 'It doesn't strike me as a macroeconomically relevant number.' The US was New Zealand's largest market for red meat in the year to June, and industry representatives said the increased tariff would put farmers and exporters at a clear competitive disadvantage. It is also Fonterra's second largest single export market (by value) – primarily taking specialist dairy protein ingredients that are used in the manufacture of nutritional products for US and global consumers. America is a key export destination for respiratory products maker Fisher & Paykel Healthcare, which has extensive manufacturing assets in New Zealand and Mexico. It is also a significant market for New Zealand wine. In all, the US represents about 11% of total exports. 'For the firms and sectors which export, it's a challenge and it's another challenge on top of higher technology costs, difficulty accessing the right labour at the right price in certain segments,' Yetsenga said. It might mean more competition, and it added to medium-term concerns about the structural Chinese economic slowdown. But Yetsenga remained upbeat about New Zealand's economic recovery. 'Look, lower interest rates are a powerful tonic,' he said. 'New Zealand's economy had a pretty difficult year in 2024, but 2025 is stronger so far and and our view is we'll continue to improve into 2026.' New Zealand's challenges were a slower burn and more structural in nature, he said. The fact that we're in a world of more geostrategic competition, was one of the challenges. 'Tariffs are a byproduct of that, with different economies seeking to build domestic advantage [and] also impose costs on third economies like New Zealand. The fact China was structurally slower and had a weaker inflation story, was another issue for New Zealand exporters. 'I think all of these things are headwinds over time, not acute, but more chronic, I think.' More broadly, tariffs were expected to take a toll on global growth but there was no threat of global recession, he said. 'The global economy last year did about 3.3%. This year we anticipate about 3%, so certainly a slowdown that you can see in the data, but still just a modest slowdown. 'To put 3% for the global economy in context, global population growth is about 1%. A global recession is global GDP growth below population growth. 'We're a long way from global recession. Even though it has become a more challenging environment and tariffs are contributing to that global slowdown.' Liam Dann is Business Editor at Large for the New Zealand Herald. He is a senior writer and columnist, as well as presenting and producing videos and podcasts. He joined the Herald in 2003.
Otago Daily Times
a day ago
- Otago Daily Times
What is the city council spending on?
Construction of One New Zealand Stadium at Te Kaha accounts for $92m of this year's Annual Plan budget. PHOTO:CCC About $1.6 billion will be spent on Christchurch City Council's Annual Plan this financial where it is going. Significant amendments to the draft Annual Plan were made by city councillors, with funding going to unexpected projects. The Air Force Museum of New Zealand will now receive $5 million towards its $16m extension project. The new wing will house the museum's C-130H Hercules and P-3K2 Orion. Another amendment is a pause in the Christ Church Cathedral reinstatement levy after the project was put on hold. The cathedral levy cost ratepayers $6.52 annually and was planned to last at least another three years. Other notable spending greenlighted through amendments include more chlorine-free water taps like those at Burnside Park and Rawhiti Domain. The taps will be installed with $900,000 allocated to the programme over three years from July next year. This will be enough to install at least two stations a year and potentially more if Government water regulations are relaxed as has been speculated. University students are winners of the budget with discounted prices for city council pools. A student ID will reduce prices to $4.90 from $6.70, in line with gold and community services cards. The reduced prices will start in July next year. Altogether, amendments added 0.04% to the rates increase. Rates have gone up by 6.6% on average to help pay for the $1.6 billion budgeted to cover the cost of running Christchurch. There will be $871 million in operational spending on day-to-day services and $648m in capital spending, including $95.5m for One New Zealand Stadium. Debt repayment will cost $81m. The city council will borrow about $366m to meet a budget shortfall with the goal of returning to surplus in 2028. Total debt will reach $2.8b after this year's Annual Plan. Mayor Phil Mauger says the Annual Plan strikes a 'difficult but necessary' balance between maintaining spending on services and keeping rates manageable. 'Across New Zealand, both organisations and households are grappling with challenging economic conditions and rising living costs, and our council is not immune to these pressures.' The rates increase will be 6.6% overall, including commercial properties, and 6.49% for the average household. This compares to a 9.52% average increase in the 2024/25 Annual Plan approved last year. Mauger points to 1.75% of this budget's rates increase going towards the One New Zealand Stadium build. 'If you take that out of the equation, the overall increase is below 5%,' he said. 'We will build on the foundation set this year – ensuring that Christchurch is well-positioned to face whatever lies ahead.' Several notable projects already had funding allocated in the draft Annual Plan ahead of the final budget. They include $20.3m for the continued Ōmōkihi South Library and Service Centre rebuild, expected to open end of next year. Flood protection and control infrastructure get $20m, which will help improve service and meet increasing demand. There is $19.6m for the activated sludge reactor at the Bromley waste plant, which aims to reduce greenhouse emissions and odour. Ongoing construction of the Ōtākaro-Avon River Corridor City to Sea shared pathway will cost $9.7m. It is due to open end of next year. The Akaroa Wharf will get $6.8m for its continuing upgrade, expected to finish in 2027. City council-funded community housing will receive $5.2m for any needed improvements. The Eastman Sutherland and Hoon Hay Wetlands will get $4.5m to improve stormwater capacity and reduce flooding. There is $3.5m for the Botanic Garden's Cunningham House, or main greenhouse, for an ongoing upgrade expected to finish next year. City council-owned companies and private organisations continue to receive significant grants from the city council. The funding includes Canterbury Museum getting $9m to continue its redevelopment and $4m going to city council-owned Venues Ōtautahi for any upgrades to major venues such as the Town Hall or Wolfbrook Arena. The city council-owned economic development agency ChristchurchNZ will receive $966,000. There is a $618,000 fund which major events hosts can request grants from. Some other well-known organisations receiving grants are Orana Wildlife Park ($260,000), The Arts Centre ($250,000) and the Watch This Space Street Art Programme ($250,000). City council income Rates cover about half of city council income with borrowing about a quarter. The rest mostly comes from fees to access city council services, and facilities and dividends from investments, particularly the city council's owned strategic assets such as Lyttelton Port Company and Christchurch International Airport. Rates: 52% $837m Borrowing: 25% $366m Fees, charges and operational subsidies: 12% $197m Dividends and interest from investments (including council-owned companies): 6% 102m Capital contributions, grants and subsidies: 3% $51m Development contributions: 2% $24m City council spending
