Allan Gray has increased its stake in Fletcher Building to nearly 20%, signalling confidence despite significant industry challenges. The investment firm, known for its long-term approach, accumulated shares whilst the stock dropped over 20% from $2.96 to $2.36 between early March and April. Fletcher Building reported a $129 million annual loss whilst maintaining a 5.1% EBIT margin. Management cancelled the interim dividend to prioritise balance sheet strength and sold its Construction division as part of a portfolio simplification strategy. New Zealand and Australia's construction sector faces sustained weak demand, with meaningful recovery not expected until 2027. Fletcher CEO Andrew Reding has emphasised cost control and disciplined capital allocation. Notably, company executives have not purchased shares themselves, contrasting with Allan Gray's aggressive accumulation during the sector downturn.

Fletcher Building has agreed to sell its construction division to French infrastructure group Vinci Construction for $315.6 million, with the final price potentially reaching $334.1 million depending on contract outcomes. The sale includes Higgins, Brian Perry Civil and Major Projects units. An additional $18.5 million in payments could be made based on several key contracts currently under negotiation. Fletcher Building expects to take provisions of $55 million to $65 million for legacy construction claims that remain with the group, excluding potential NZICC litigation. Chief executive Andrew Reding said the sale reflects the company's strategy to refocus on core manufacturing and distribution operations. The deal is subject to various conditions and adjustments.