Fletcher Building reiterates profit warning, increases money for directors

All eyes will be on the Fletcher Building shareprice when the stockmarket opens this morning.

Shares in the country's second largest listed company suffered a 4% drop in price to $6.15 each yesterday following reiteration at the company's annual meeting that weak construction activity means first half profits will be lower. The company has previously said first half earnings were likely to be down about 10% on the $166 million earned in the same period the previous year.

CEO Jonathan Ling told shareholders the company had a disappointing year and was further reviewing its cost base. Staff redundancies had taken place here and across the Tasman - although he noted these numbered in hundreds, rather than thousands of jobs lost two years back when the global financial crisis first hit the company. The firm employs about 20,000 globally.

On a positive note, he said new house buildings were expected to pick up in the new year and that work on rebuilding Christchurch should gather pace. October was a hard month to judge, he said, with the Maui gas pipeline outage affecting Fletcher businesses and the Rugby World Cup stalling Auckland activity.

Shareholders in Fletcher Building joined those in Sky City in approving an increase in the fee pool for directors' remuneration. For Fletchers, this was by $500,000 to $2 million - although shareholders were told this increase was to cover up to five years.

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On what basis does directors remuneration rise? On performance or inflation? I feel there is a moral aspect, especially from our leaders whether in commerce or polictics to show real leadership and restraint in very difficult times. Lessons from Greece and Italy should he heeded and learn't from. Paying the people at the top more and people at the bottom less so they both perform better is not the answer.

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Having attended the AGM, i am pleased to have supported the increase in fees.

The only valid point the left-wing hombres who are camped in the Square is the granting of ever-increrasing fees where the companies are sinking. This is not the case with Fletcher Building

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HEAR, HEAR

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In the real world, there is an 80/20 power law distribution... 20% of your customers produce 80% of your revenue, 80% of internet trade is on 20% of the sites, 80% of earnings is from 20% of your product range... so get over it there is no average in these sorts of distributions although it should be pointed out that 109 is the median iQ which means half are below that.

The directors will only deserve an increase in fees based on how they can derive future performance i.e. what they are going to do to produce sustained value otherwise they are gone - the owners of the company are the shareholders and the directors are there to produce benefits for shareholders - it's not a charity workhouse or a welfare system.

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I am sure the investors who bought FBU shares in the $9 range are not so happy about an increase in directors fees! Since that buy, they have seen the shares fall to todays shareprice.
They are a great NZ company, but since the politicians are getting a pay increase plus perks, AND back dated to July 1st, then why not the FBU directors.

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The Directors should be getting a decrease in fees. They have fallen asleep at the wheel with the Placemakers business; chewed & eaten by Bunnings & Mega 10.

Any business that doesnt evolve with the times becomes extinct. Looks like they got caught thinking in their old monopoly ways; that business will take care of itself.

People can not longer afford to build (to the same scale). This is unlikely to change any time soon. It might be time to adopt the McDonalds business model. High volume, low margin & charge what your customer can afford.

So simple. Perhaps I should send the directors an invoice. All too stale if you ask me, & probably never had it anyway.

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