Fletcher Building Market Update
(This is a shortened version of the market update issued by Fletcher Building)
Market conditions across the Company’s Materials and Distribution1 divisions have weakened throughout FY24. In New Zealand, market volumes to date in 2H24 have moved 5% lower than 2Q24, and in Australia market volumes to date in 2H24 are 10% lower compared to 2Q24. There has also been a notable slowdown in house sales in the New Zealand market and an end to the house price momentum seen through the first half of FY24.
Trading update and outlook
At the Interim Results in February 2024, the Company provided guidance for FY24 EBIT before Significant Items to be in the range of $540 million to $640 million. The mid-point of the Company’s guidance range assumed a continuation of market volumes and house sales run-rates broadly in line with those seen in 2Q24. As a result of the trading conditions in 2H24, the Company now expects lower FY24 earnings. The Company’s updated guidance is for FY24 EBIT before Significant Items in a range of $500 million to $530 million inclusive of $10 to $15 million of restructuring costs related to cost out initiatives. The variability within the range is driven by May and June being two of the largest trading months for the Company.
Although all the Material and Distribution divisions have experienced softer revenues due to the market conditions, the Company’s updated guidance is primarily driven by the following areas:
Although we continue to observe solid performance by some business lines within these divisions, these trends are not sufficient to offset the broader declines affecting our business. The Company expects market conditions to remain challenging in both New Zealand and Australia in the near term and continues to look for opportunities to manage costs against that backdrop.
The Company expects that net debt at 30 June 2024 will be in a range of $1.9 billion to $2.0 billion. The Company’s liquidity profile remains robust, with $2.8 billion of debt facilities in place and liquidity at 30 June 2024 is expected to be $0.8 billion to $0.9 billion.
To view the full Market Update, visit the Fletcher Building website: www.fletcherbuilding.com