Fletcher Building’s net earnings for the December half-year fell 8%, and taking out significant items they were down 33%, the company said today.
Key financial points:
- Revenue, down 5% to $3.96 billion ($4.19 billion)
- Revenue from continuing operations, down 5% to $4.33 billion
- Ebit (earnings before interest & tax) & before significant items, down 12% to $219 million ($248 million)
- Net profit after tax, down 8% to $82 million ($89 million)
- Net earnings before significant items, down 33% to $107 million ($160 million)
- Basic earnings/share, down 6% to 9.8c (10.4c)
- Basic earning/share from continuing operations, down 41% to 9.8c (16.6c)
- Basic earnings/share from continuing operations before significant items, down 23% to 12.8c (16.6c)
- Net tangible assets/share, $3.19 ($2.95)
- Interim dividend, up 40% to 11c/share (8c)
- Group earnings guidance for the full year in the range of $515-565 million reconfirmed.
Fletcher Building expects market activity in the New Zealand residential sector in the second half to be similar to the first half. Chief executive Ross Taylor said:
“While consents remain high, we continue to see a changing shift to smaller floor size & typology weighted to attached dwelling units. Activity in the commercial, civil & infrastructure sectors is expected to continue to trend slightly lower until the renewed infrastructure investment comes onstream from the 2021 financial year (second half of 2020).
“In Australia, we expect the contraction in residential activity to stabilise in the second half of the financial year, before returning to growth from the 2021 financial year. Non-residential activity is expected to be broadly flat for the remainder of this financial year, with infrastructure project activity to remain lumpy in key sectors.”
Mr Taylor said earnings would be weighted to the second half more than usual owing to:
- an expected improvement in performance of the Steel business
- a stronger pipeline of Fletcher Residential house sales due for settlement
- the construction pavement season weighted to the second half, benefiting Higgins, and
- benefits of the Australia cost-out programme nearing full run-rate.
On the first-half results, Mr Taylor said: “First-half results are in line with our expectations & those set out at our annual shareholders’ meeting in November 2019. Our business is now stabilised & focused, providing the foundation to drive consistent performance & growth into the future.”
On the biggest issue confronting Fletcher Building – the fire which wrecked the SkyCity Entertainment Group Ltd’s NZ International Convention Centre in downtown Auckland as Fletcher Construction had nearly completed it – Mr Taylor said: “Insurance will respond to loss & damage to the NZ International Convention Centre caused by the October 2019 fire, and an extensive work programme to determine the rebuild plan, timeframes & cost is now underway.”
In the housing sector, he said demand was strong and Fletcher Residential had a large volume of committed sales due for settlement in the second half.
One last point on business, Fletcher Building’s investment in production facilities: “We continue to make investments in innovation & local manufacturing to drive long-term, sustainable growth for our shareholders.
“An example of this is the new state-of-the-art plasterboard facility we are building in Tauranga, which we also announced today. The facility is a firm commitment to local manufacturing, which will enable us to meet customer demand for the long term. It will also create around 100 permanent regional jobs and supports our goal of reducing carbon emissions by 30% by 2030.”
Mr Taylor said Fletcher Building had steadily bought back shares since last September: “Our balance sheet remains strong, with our leverage ratio below the bottom end of our target range.
“In September 2019 we commenced an onmarket share buyback of up to $300 million to deliver value to shareholders. We continue to make good progress and have acquired 27.9 million shares for $141 million, representing 3.3% of issued capital.”
Attribution: Fletcher Building release, accounts.