Page 8 - HW September 2020

hard news
Fletcher Building and the “new market reality”
ALONGSIDE THE REVEAL of its FY2020 result in mid-August, and the extra pain caused by the April lockdown, Fletcher Building showed that it’s continuing to set itself up for what it is calling the “new market reality”.
With a year-end net loss of $196 million, the company’s overall FY2020 top line fell by 12% and its overall EBIT by a whopping 125%.
On top of loss-making legacy construction projects, “reduced trading levels and lower productivity resulting from the pandemic restrictions had an adverse impact of approximately $200 million on EBIT before signi cant items.”
e summary of divisional FY2020 revenues:
• Building Products $1.17b (–11%)
• Distribution $1.47b (–8%)
• Concrete $740m (–8%)
• Residential & Development $466m
(–27%)
• Construction $1.32b (–23%) • Australia $2.8b (–7%)
e divisional FY2020 EBITs:
• • • •
• •
CEO, Ross Taylor.
Building Products $87m (–48%) Distribution $85m (–26%) Concrete $74m (–17%) Residential & Development $65m (–53%)
Construction –$147m (–388%) Australia $33m (–57%)
In terms of what it calls an “uncertain”
downturn of c.25% in New Zealand and c.20% in Australia”, adding that the rst half of FY21 is “expected to be stronger than the second half of the year, as
the economic impact of the COVID- 19 pandemic ows through to activity levels.”
Bottom line? “ e outlook is uncertain, and the Group will remain vigilant
to macro factors and movements in forecasts.”
Drilling down into Distribution (PlaceMakers, Mico & Forman Building Systems), prior to March, revenue growth was tracking 2% above the prior year but, by year-end, the division’s Gross Revenue had fallen by 8% on last year, to $1.47 billion.
Distribution’s EBIT before signi cant items was $85 million, down 26% on the prior year, while Gross Margins were “steady despite continued competitive intensity especially in large commercial projects”.
Unsurprisingly, Distribution’s April trading volumes were limited with
outlook, looking ahead the company “has undertaken a thorough cost reset process to prepare for an expected market
6 NZHJ | SEPTEMBER 2020
MORE AT www.hardwarejournal.co.nz