Cheaper imports bad for Fletchers
Fletcher Building may be hurt by a Budget decision to remove tariffs on imported plasterboard and duties on other building products, analysts say.
Fletcher, which holds a 94 per cent share of the New Zealand plasterboard market, saw its shares fall 11c to $9.21 yesterday. The Government took the step to lower the cost of building materials, said to be 30 per cent higher than Australia's.
"On the face of it, the broad takeaway from that is that it's a negative for Fletcher Building," Craigs Investment Partners' head of private wealth research, Mark Lister, said.
Building products provided about 20 per cent of Fletcher's earnings.
Fletcher Building would not comment yesterday and referred the media to the Building Industry Federation, which said the country could be swamped with imported products.
Federation chief executive Bruce Kohn doubted the Government's claim that the move would save new-home builders $3500, and said similar moves in Australia "flooded" its market with low-quality materials.
Registered Master Builders Federation chief executive Warwick Quinn said the Government had signalled late last year that it would drop tariffs and anti-dumping provisions on many building products, "and we agreed with that because we need as much competition as we can possibly get".
"That needs to be tempered with anti-dumping, so what we don't want is huge amounts of spare products from China or whatever coming in and flooding our markets," he said.
A rival of Fletchers, Knauf Plasterboard, said foreign entrants to the New Zealand market at last had an "even playing field".
Knauf's national sales manager, John Russ, said the tariff cuts would have no direct financial impact on his company's products, which were brought in from Australia.
Knauf's entry had been delayed because New Zealand builders were cautious and would not use its products unless they had approval from the Building Research Association, in addition to the building code.
"Leaky homes and the earthquake in Christchurch have made a lot of people very risk-averse, and appraisals are something we don't experience anywhere else in the 60 countries that we are in," Russ said. Fairfax NZ