Fletcher Building Ltd announced today it will undertake a capital return to shareholders of up to $300 million through an onmarket share buyback. The buyback will start following release of the company’s full-year results in August.
Chief executive Ross Taylor said: “Fletcher Building is continuously assessing its balance sheet position & investment opportunities to drive shareholder returns.
“Following the completion of the Formica sale for $1.2 billion, we have considered a few key factors for allocation of the sale proceeds. The company is well below its target leverage range, and better than previously forecast. We have around $600 million of debt that we will repay over the next 12 months. And we have around $250 million of cash outflows to complete the legacy B+I (building & interiors division) projects, and we remain confident that these projects will be completed within the current provisions.
“Based on these factors, we are in a position to distribute up to $300 million to shareholders, with the most effective method being an onmarket share buyback.”
The company confirmed that its dividend policy remains unchanged, with a targeted payout ratio of 50-75% of net profit after tax (before significant items). As previously indicated, the 2019 dividend will be weighted towards the final payment and announced at the company’s full year results.
Fletcher Building also confirmed 2019 financial year guidance of ebit (earnings before interest & tax) before significant items of $620-650 million.
Mr Taylor is leading a Fletcher Building management presentation in Sydney today on group strategy, an in-depth presentation on the Australia division and a presentation on capital structure & use of the Formica sale proceeds.
Attribution: Company release.