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FIRST CUT: Fletcher's annual operating earnings meet guidance

Wednesday 21st August 2019

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Fletcher Building posted a $164 million annual net profit, a turnaround from the previous year’s loss and the first year of a five-year refocusing strategy to grow the business, the company said.

Fletcher’s net profit for the year ended June compares with a net loss of $190 million the previous year.

Earnings before interest and tax came in at $631 million, within guidance of $620-650 million, compared with $50 million the previous year.

Fletcher will pay a per-share dividend of 15 cents, taking the annual payout to 23 cents. Fletcher didn’t pay dividends the previous year.

“Full-year 2019 was an important transition year for the company and we made significant progress on our five-year strategy,” says chief executive Ross Taylor in a statement.

“In New Zealand, our core building products and distribution businesses delivered good results, maintaining strong market positions and revenues despite operating in a highly competitive environment,” Taylor said.

“The construction stabilised which led to a return to profitability and we are on track to complete the remaining legacy B+I (Building + Interiors, Fletcher’s high-rise construction unit) projects within the provisions we set in February 2018,” he said.

The B+I unit lost the best part of $1 billion over 18 months on projects such as the Christchurch Justice Precinct and the still-to-be completed Sky City hotel and convention centre and Commercial Bay projects.

“In Australia, the performance reflected tough market conditions, rising input costs and poor operating disciplines in some areas,” Taylor said.

“Turnaround plans are well underway to reset these businesses and deliver growth in FY20.”

Fletcher sold the Formica and Roof Tile Group businesses for a combined $1.25 billion during the year and has started reducing debt by $700-800 million and plans to return $300 million to shareholders via a share buyback.

Fletcher is now “a leaner organisation and end the year with a more manageable footprint and a strong balance sheet. Looking ahead, we will drive performance across the business in FY2020.”

Fletcher shares closed yesterday at $4.57 and have fallen 35 percent in the past 12 months.


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