The Fletcher Building Ltd (ASX: FBU) share price has returned from its suspension and crashed deep into the red.
In morning trade, the ASX 200 building materials company's shares are down 10% to $4.02.
Why is this ASX 200 share crashing?
Investors have been heading to the exits today in response to concerns over plumbing failures that occurred in a number of homes built in Perth between 2017 and 2022.
Building group BGC Housing claims that these failures are the fault of Fletcher Building and estimates that the repair bill could be as much as $700 million.
According to a response, Fletcher Building doesn't believe it is to blame and highlights that the "evidence clearly points to installation as causation." The ASX 200 share also points out that "testing to date proves no manufacturing defect" and a "recall is not justified and would be an unnecessary impact on homeowners."
Fletcher Building has also dismissed BGC's $700 million repair bill estimate. It notes that "realistic scenarios that better align with the facts, suggest that an industry cost to repair Perth houses, could be a fraction of that, perhaps in the order of AUD$50m to $100m."
However, judging by how its shares are performing today, it seems that not everyone is as confident as management.
Unfounded allegations
The ASX 200 share's CEO Ross Taylor commented:
Despite BGC's attempts to blame shift, Iplex AU and Fletcher Building remain committed to our course of action in helping the industry resolve the plumbing failures in Perth. We will continue to scientifically work through causation of the failures and support the industry to put in place the best solutions for affected homeowners in Perth.
BGC's allegations are unfounded – their view on causation has changed over time. Our independent expert advice is that the methodology and hypothesis BGC used is gravely flawed and their findings unsupported.
