New Zealand-listed shares of Fletcher Building slumped 14% in resumed trade on Monday even after the firm denied claims that plumbing failures reported in several homes in Australia were due to a manufacturing defect in the pipes it produced.
ASX-listed shares slumped nearly 10% and were the top losers in the ASX 200 benchmark index. Shares of Fletcher were on a trading halt in both exchanges since last Thursday to allow the company to respond to the claims.
The construction materials maker said in August nearly 1,500 of 15,000 houses constructed using its pro-fit polybutylene plumbing pipes had experienced leaks between mid-2017 and mid-2022.
The Buckeridge Group of Companies (BGC), which along with smaller peer Delstrat built about 90% of the currently affected homes in Perth, said pipe defects lead to the leakage and accused Fletcher of staving off a product safety recall.
Fletcher denied the claims on Friday, citing that the significant plumbing failures were only evident in Perth despite the same quantity of pipe being sold nationally, which points to region-specific installation practices as the cause of the failures.
Shares dropped as much as 14.1% to NZ$4.190 on Monday - their lowest level in nearly three years. The stock was last down 12.1% and set for its worst day since Oct. 12, 2011, if losses hold.
"Both Fletcher and BGC are motivated parties and the process to resolution will likely be volatile and drawn out, in our view," analysts at JP Morgan wrote in a note.
(Reporting by Himanshi Akhand in Bengaluru; Editing by Sherry Jacob-Phillips)
