Page 10 - HW March 2022

hard news
A tale of two quarters in Fletcher’s first half
RELEASED IN MID-FEBRUARY, Fletcher Building’s first half of FY2022 (the six months ending 31 December 2021) is a tale of improving revenues and reduced EBITs but with stronger prospects for the second half.
Although Q1 was impacted by lockdowns and border restrictions (and took $105m from the H1 bottom line), an improved Q2 led overall revenue growth for the half to +2% on H1 FY2021 with net earnings +41%.
Looking to the divisional performances now, the New Zealand materials and distribution divisions (Building Products, Concrete, and Distribution) “performed strongly” after the lockdown period
and, although the H1 earnings for these divisions were down slightly, Q2 revenues (+21%) and theirQ2 EBIT before significant items (+45%) both recovered.
In this respect, Distribution’s gross revenue for H1 was $866m (+4% on H1 FY2021) with an EBIT of $54 million (negative 5%) and a slightly reduced EBIT margin.
Staying with Distribution, strong growth was noted in the timber, cladding and frame & truss categories, along with the recognition that demand has been outstripping industry capacity.
Operationally, the program of rolling
individual PlaceMakers branches into operating Hubs continues, with two additional Hubs in the lower North Island scheduled to go live early in the second half.
Property-wise, a larger new PlaceMakers branch for Dunedin and the refurbishment of the Mangawhai branch are both scheduled to open in the second half of the year.
Elsewhere within Fletcher Building, Building Products reported gross revenue of $765m (+9% on H1 FY2021) with a reduced EBIT of $96m (negative 6%).
Concrete reported H1 gross revenue of $428m (flat on H1 FY2021), and an EBIT of $61m (negative 2%).
Residential & Development’s revenue for H1 was $318m (negative 11% on H1 FY2021) but its EBIT was +81% at$112m.
Within this division, the Clever Core offsite manufacturing business made an H1 EBIT loss of $2 million (flat on H1 FY2021) but the company says
the prospect of more sales to Fletcher Living in H2, along with homes for two external customers, will help the business continues to grow its volumes.
Construction reported gross revenue for H1of $720m (+11% onH1 FY2021) but with an EBIT loss before significant items of $10m, compared to a profit of
$13m in H1 FY2021.
Nevertheless, says Fletcher Building,
the Construction division “continues to make good progress inrebalancing its future order book to deliver an improved risk profile and margins.”
Australia reported gross revenue of almost $1.4b (flat on H1 FY2021), while its EBIT before significant items was $45m (negative 12%).
Looking to the second half of FY2022, Fletcher Building’s overall EBIT margin is expected to be in the order of 9.5% with an FY2022 full-year EBIT before significant items of some $750m, says the company (+12% on FY2021).
Having said this, with the uncertainties around the COVID-19 Omicron variant, based on its Australian experience Fletcher Building warns productivity may be impacted, to the tune of some $25- 50m off its year-end EBIT.
In summation, says Fletcher Building Chair Bruce Hassall: “We remain confident in our outlook for the FY23 year as it is unlikely we will suffer from any further full lock downs from COVID- 19, our markets are likely to remain at or above present levels, and weexpect the Group to deliver a further improvement to profitability.”
https://fletcherbuilding.com/
8 NZHJ | MARCH 2022
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