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Perth-based robotic technology company FBR (ASX: FBR) has lost its second joint venture in the space of 18 months, after a deal with Brickworks Building Products was abandoned due to COVID-19 uncertainty in the Australian residential construction market.
FBR has announced today the two parties mutually agreed to discontinue the joint venture (JV) Fastbrick Australia.
A close to 25 per cent fall in FBR's share price this morning almost wipes out all the gains in recent weeks since its second adrian robot (H02) managed to lift bricklaying speeds by 300 per cent to more than 200 blocks per hour across a full house build.
The JV's collapse will likely feel like déjà vu for investors who saw share values plummet after a Memorandum of Understanding (MoU) with major US machinery company Caterpillar (NYSE: CAT) was discontinued in December 2018.
Pilot programs with Summit Homes Group and Archistruct Builders & Designers will also be discontinued, but the company emphasises learnings have been gained the successful construction of residential home structures under those arrangements.
FBR will continue as planned to build a display home in WA with Archistruct this year.
While today's announcement is a blow for the company's immediate hopes in Australia, once market conditions improve both parties are open to re-engaging and FBR has turned its attention to the world's largest construction markets in the northern hemisphere.
"The mutual decision to discontinue the Fastbrick Australia joint venture was made in the context of what is in the best commercial interests of each of FBR and Brickworks in the current unique circumstances," says FBR CEO Mark Pivac.
"Going forward, FBR intends to focus on deployment of its robotic technologies in large overseas markets with a compelling use-case for our technology.
"The dissolution of Fastbrick Australia frees up equipment and resources previously committed to the joint venture, and will enable FBR to accelerate the progress of its global opportunities."
He says FBR may continue to purchase bricks from Brickworks and may engage with Australian builders like Archistruct and Summit Homes, but this would now be direct rather than through the joint venture.
"The joint venture obliged the parties to define a specific viable business plan which they anticipated being a challenge in the context of Australia's uncertain economy, with the decision to discontinue the joint venture preserving the flexibility of each party," says Pivac.
"The COVID-19 pandemic has encouraged many companies to reassess their position in the commercial landscape with a view to ensuring their long-term viability, in particular having less reliance on manual labour and imported labour, and to understand and adjust to the new normal as fast and as seamlessly as possible.
"We are doing all we can to position ourselves for success while retaining our operational flexibility."
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