February 14, 2024

Industry News

Fletcher Building Financial Results For First Half of FY2024

In announcing Fletcher Building Limited´s results, chief executive, Ross Taylor, said: “Against the backdrop of materially weaker trading conditions, particularly in the NZ residential sector where volumes declined 20%, Group revenue of $4,248 million was in line with the prior period’s $4,284 million. EBIT before significant items was $264 million, compared to $360 million in the prior period. The Group reported a net loss after tax of $120 million, compared to a profit of $92 million in the prior period. Disappointingly, the result was heavily impacted by the $165 million significant items provision on the New Zealand International Convention Centre announced on 5 February and a $122 million non-cash impairment and write-down on the Tradelink Australia business.”

In New Zealand, revenue for the materials and distribution divisions (Building Products, Concrete and Distribution) was 8% lower than HY23. However, this compares to overall market volumes which were 15% lower compared to HY23. The market decline was driven primarily by the residential sector, which weakened by around 20%, to which these divisions have a 60% exposure.

Mr. Taylor said: “In a more challenging trading environment, the New Zealand materials and distribution divisions performed solidly. Gross margins remained robust at 29.3% (HY23: 30.3%), with the reduction versus HY23 primarily due to a shift in revenue mix towards the lower-margin commercial and infrastructure sectors. The divisions proactively managed price and costs to help offset increased competitive intensity and ongoing inflationary pressure.

“For our Residential and Development division, the house sales market was a relative bright spot in New Zealand, with improved buyer activity, especially first-home buyers and a stabilising of house prices after 18 months of decline. Fletcher Residential increased EBIT to $41 million (HY23: $33 million), with 419 units taken to profit compared to 189 in HY23.

“A particular highlight of the half was the performance of the Australian division which delivered EBIT and EBIT margin broadly in line with HY23 despite a softer market. Effective price disciplines and a shift toward higher-margin products saw the gross margin lift to 33.1% (HY23: 31.9%) and overhead costs were 3% lower than the prior period.

“As we look ahead to the remainder of the year, we expect FY24 Group EBIT before significant items to be in a range of $540 million to $640 million, with the mid-point assuming a continuation of current market conditions for the balance of FY24,” Mr Taylor said.

For further information, visit the Fletcher Building website: www.fletcherbuilding.com