Fletcher Building increases fund for leaky pipes to A$15m

A Fletcher Building subsidiary is moving to help builders in Western Australia after more than 1000 homes using a pipe product were found to have leaks.

Fletcher said reports to Iplex Australia indicated about 1200 of the 15,000 houses built in Western Australia using the "Pro-fit" pipe product between mid-2017 and mid-2022 experienced leaks.

Fletcher first alerted shareholders to the issue in its interim results published in February.

It said the complaints related to leaks in homes primarily built by group home builders in Western Australia which have required repair or replacement, including damage to homes.

It said the state's building regulator was also investigating the issue.

Fletcher said the Pro-fit product was sold only in Australia and the resin used in it during the period in question was not used by Iplex New Zealand or any other Fletcher Building company for any other product.

It said the product was also sold to other Australian states but those states did not see a spike in reports of leaks.

Iplex Australia stopped selling the Pro-fit pipe in mid-2022.

Iplex said it was advised by Western Australia regulators that testing would lead to a finding that the leaks were caused by a manufacturing defect.

The company has proposed interim arrangements with two large builders in Perth who built 90 percent of the affected homes to assist homeowners.

Fletcher said Iplex would increase a fund set up to help other WA plumbers and builders from A$2 million to A$15m.

It said the extent of Iplex's accountability and full costs could not be established at this time.

"We acknowledge the frustration and inconvenience impacted homeowners and their families are facing. We are working hard with builders to arrive at an acceptable outcome for affected homeowners," Fletcher Building chief executive Ross Taylor said.

Costs relating to the Pro-fit pipe issue were excluded from Fletcher's full year earnings guidance.