Fletcher half-year loss $322 million

Fletcher Building Ltd posted a half-year operating loss of $322 million today, down from a $310 profit for the December 2016 half before significant items.

That outcome was on revenue up 6% to $4.889 billion. The net loss before significant items was $273 million, down from a $187 million profit.

Chief executive Ross Taylor said these results incorporated a $631 million loss of Building + Interiors (B+I) division losses.

He expected an additional $29 million of overhead & transition costs in the second half would take the full-year loss for B+I to $660 million.

Excluding B+I, operating earnings fell 13% to $309 million.

Mr Taylor said: “Outside the challenges experienced in B+I, the broader Fletcher Building business continues to perform to guidance. While it is pleasing to see an increase in sales revenues, operating earnings have decreased due to lower profits in the Construction Division, outside of B+I, as well as the Building Products Division.

“In the Infrastructure & South Pacific businesses of our Construction Division we are rolling off major projects from the 2017 financial year, and we are only in the early stages of new ones. In Building Products we have seen gross margins compress as a result of higher input costs and costs associated with increasing supply chain capacity to meet increased demand.”

The Building Products Division reported a 13% increase in gross revenues from $1.108 billion to $1.25 billion. Operating earnings declined 9% from $129 million to $118 million. This was driven by additional costs incurred in various businesses to alleviate capacity constraints, increased energy costs, one-off redundancy costs in Fletcher Insulation Australia and a fire at Humes’ Penrose site.

“Earnings in the International Division are largely flat, while Distribution & Residential continue to post strong growth.”

The Distribution Division increased gross revenues by 7% to $1.757 billion and operating earnings by 6% to $89 million.

The Residential & Land Development Division increased gross revenues by 45%, from $163 million to $236 million. Operating earnings increased 57% to $47 million.

Mr Taylor reiterated the company’s expectation full-year operating earnings excluding B+I would be between $680-720 million.

As announced on 14 February, no interim dividend will be paid.

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