Cladding firms' shares tumble after Gove remediation threat

Published: 2022-01-25 01:21:12 ET HWM

BUILDING material manufacturers and property developers' shares plummeted yesterday morning as the government toughened up on firms unwilling to pay to fix unsafe homes.

Housing secretary Michael Gove threatened a UK trading ban on manufacturers of combustible cladding and insulation in a letter to the Construction Products Association.

In the letter, Gove said more than £700m in profit had been generated by three firms closely linked to the Grenfell Tower disaster of June 2017, where 72 people were killed in a fire.

The trio of firms are thought to be Arconic, Celotex and Kingspan, which made the combustible cladding panels and insulation foam on Grenfell Tower.

Kingspan shares were down almost nine per cent yesterday while Celotex's French owner Compagnie de Saint-Gobain saw shares dip almost seven per cent.

Arconic shares were down more than one per cent.

Like developers, suppliers have been given a March deadline to cough up cash for a fund to fix fire safety defects on flats across the country.

Gove requested to meet with the construction sector's trade body and said the total contribution from the cladding and insulation sector "must represent a significant portion of the total remediation costs."

"A new deal must include a clear commitment from the sector that they agree to make financial contributions in this year and in subsequent years as we have already asked developers to do," he wrote.

The government has estimated the cost to remediate unsafe buildings between 11-18m and buildings over 18m is around £4bn and £5.1bn respectively.

The country's major developers also saw shares sink yesterday, with shares in Berkeley, Persimmon and Barratt down more than five per cent.