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Fletcher Building’s positive FY2022 – the details
JUST TOO LATE to be included in our last magazine, Fletcher Building released its 2021-2022 (FY2022) year-end figures in August.
After a first half coloured by a locked- down first quarter and a second quarter devoted to recovery and coping with
the surge in demand, investors will have been pleased with a big (almost 45%) rise in earnings per share, while the media reaction was generally supportive.
Overall, the Fletcher Building group delivered improved revenue, profit and margins, while Return on Funds Employed (19.3%) was also ahead of target.
From a top line of $8.5 billion (+5% on F2021), net earnings were $432 million, +42% compared to FY2021.
The result highlights the company’s “ability to manage through a dynamic operating environment, while remaining focused on delivering long-term, sustainable growth,” says Fletcher Building CEO Ross Taylor in the annual report.
Before getting into some of the details, here is a snapshot of the divisional top and bottom lines for FY2022:
FY2022 Gross revenue ($ millions): Building Products $1,610 (+12% on FY2021)
Distribution $1,789 (+7%)
Concrete $881 (+4%)
Australia $2,806 (+7%)
Residential & Development $692 (–6%) Construction $1,559 (+7%)
FY2022 EBIT ($ millions): Building Products $210 (+6% on FY2021)
Distribution $136 (+9%) Concrete $128 (+9%)
Australia $116 (+25%) Residential & Development $217 (+41%)
Construction $14 (–55%)
Also worth noting at this point is the $239 million spent by the materials and distribution divisions to build inventories, half of which was about rebuilding
stock levels following the draw-down
in FY2021 and investment in “resilience stocks” to meet high levels of demand,
with higher input prices accounting for the rest.
Building Products – No doubt as with the other divisions, Building Products (now including Forman as part of the new Comfortech business) would have been encouraged by a strong second half of the year, following a first half impacted by lockdowns, ongoing cost increases
in raw materials and no less than $115 million spent building inventory to mitigate global supply chain delays.
In this respect, each of the division’s segments performed well, with the Steel business earnings +40% on FY2021, pipes +11%, and the finishing trade businesses +4%.
Looking further out, Building Products has a raft of manufacturing and operational upgrades planned
for its various businesses, including next year opening the new Winstone Wallboards plant at Tauranga which will increase plasterboard volumes by 30% over current levels and do so more economically and efficiently to boot.
FY2023 will also see the completion
of Humes’ Papakura pipe manufacturing plant, and the construction start mid-FY of the new Comfortech glasswool manufacturing plant.
Also planned is the consolidation of four Steel operating sites in Auckland
by 2026 to address capacity constraints, while the upgrade of the Laminex Taupō plant by 2027 will deliver “a new range of latest generation wood-fibre based panel products not currently available in New Zealand.”
Distribution – Although positive, Distribution’s top line this year has been impacted compared to our FY2021 report with Forman having moved into
the Comfortech business and therefore into the Building Products division. The numbers above have been adjusted in this respect.
Distribution’s capital expenditure during the year was $11 million, focused mainly on investment in new and refurbished branches, while the Regional Hub program also progressed with 10 hubs now in place.
In terms of digital channels, in FY2022, some 7% of PlaceMakers sales were transacted through e-commerce tools, with 60% of trade customers now registered for e-tools.
Distribution’s ongoing digital investment will continue, having now built the capability within the division to analyse and mine customer data.
Indeed, says PlaceMakers Chief Executive Bruce McEwen in the annual report: “The opportunities
for delivering an optimised customer experience are vast, and initially we are working on personalisation for digital onboarding, to re-engage lapsed customers online and to test and learn targeted promotions.”
Mico too will see developments in digital in FY2023, with the launch of
a suite of new e-tools, mobile app and portal, leveraging the programs already rolled out for PlaceMakers and Tradelink.
In the coming year, Distribution
will be working on the integration of the six TUMU branches, and in terms of manufacturing, PlaceMakers also signalled that it will also be investing in new automated frame & truss capability over the next three years.
The outlook – In terms of an outlook for FY2023, Ross Taylor says: “We expect to see solid profit growth as there continues to be a solid pipeline of work to get through in our end markets, and there is unlikely to be another COVID-19 forced shutdown of our operations.
“Our balance sheet and overall financial position are strong and we plan to keep it that way.”
In this respect, Fletcher Building’s FY2023 EBIT before significant items is expected to grow by “at least $100 million” or some 23% above FY2022.
www.fletcherbuilding.com
10 NZHJ | SEPTEMBER/OCTOBER 2022
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