Fletcher Building addresses Golden Bay shipping disruption

Fletcher Building’s Golden Bay cement business is currently facing operational challenges due to issues with the Marine Vessel Aotearoa Chief, the firm said in an ASX announcement.

Owned and operated by a third-party provider, the MVAC is responsible for transporting cement around the North Island from Golden Bay’s Portland manufacturing facility.

A mechanical issue has rendered the vessel inoperable, and it is currently docked at Northport for inspections and repairs.

The exact timeframe for completing these repairs and sourcing replacement parts remains uncertain.

Fletcher Building’s primary focus is maintaining its supply chain and minimising disruption to North Island customers.

To address the potential impact of the MVAC’s downtime, Golden Bay has enacted contingency plans leveraging significant investments made in recent years.

These plans include the immediate use of alternative transport options such as the existing coastal barge, along with increased reliance on road and rail transport.

The company is also exploring long-term solutions, including sourcing alternative cement supplies from both domestic and offshore suppliers, and securing a replacement ship if necessary.

Fletcher Building’s preliminary assessment estimates that the disruption may impact FY25 earnings by $10 million to $30 million.

This range is influenced by anticipated increased costs associated with the various mitigating actions.

However, the actual financial impact will depend on several variables, including the duration of the issue, available mitigation actions, third-party costs, and overall impact on operations.

Fletcher Building said it is committed to keeping the market informed and will provide updates as more information becomes available regarding the status of the MVAC and the ongoing measures to mitigate supply chain disruptions.