REH moat, page-89

"..some comments from Fletcher Building result this morning that may be of interest to REH holders. The write-down in value of FBU's Tradelink business is old news, but it also had some comments, which are optimistic in tone, about the performance of, and investment in, that business."

@jg123456,

Thanks for that industry feedback.

The trouble is that, despite that positive commentary and investment in new stores and improved service offering, FBU's Annual Report shows Tradelink's Operating Profit in FY2017 coming in at just $5m, down from $17m in FY2016 (they do note, that FY2016's result was impacted by $14m profit from an asset sale, although this was offset by one-off costs, so $17m was still the underlying number).

So if earnings going from $17m to $5m represents an improved customer proposition and a gain in market share, I shudder to think how badly the plumbing supplies industry has slumped during the past 6 months.

Note: I suspect that when Reece reports its results in a few day's time, it will look nothing at all like the bloodbath implied by the Tradlink "update". The reason I suspect this is that FBU has some form in putting a positive gloss on Tradelink, only to have the hopes subsequently dashed by the somewhat nasty reality... see below

https://hotcopper.com.au/threads/reh-moat.3266213/page-11?post_id=23056463#.WZPdI1Gg-Uk