Page 6 - HW MARCH 2020

hard news
Fletcher Building
numbers “in line with expectations”?
RELEASED LAST MONTH, Fletcher Building’s FY2020 first half (H1) numbers (6 months to 31 December 2019), although negative at a Group level, were however largely as expected.
Fletcher Building Chief Executive, Ross Taylor, says the results were “in line with our expectations and those set out at our Annual Shareholders’ Meeting in November 2019,” adding: “Our business is now stabilised and focused, providing the foundation to drive consistent performance and growth into the future.”
Overall Group revenue was almost
$4 billion, 5% down on last year’s first half, thanks to legacy Construction projects and “tough market conditions” in Australia.
The Group EBIT before significant items on continuing operations was $219 million (down 11.7%), and Net Earnings $82 million (down 7.9%).
DISTRIBUTION COUNTS COST OF INVESTMENT
Drilling down to Distribution – PlaceMakers and Mico – gross revenue for H1 FY2020 at $824 million was +2% on H1 FY2019 while the reported H1 EBIT was negative 9% at $50 million.
Having said this, it’s worth pointing out that Distribution was the only one of Fletcher Building’s seven businesses to improve its H1 top line.
Distribution revenue “increased in line with market activity”, the bottom line decrease being put down to “highly competitive market conditions in the
key Auckland market ... along with higher wage, property and freight costs”, plus significant ongoing investment in Distribution’s digital capabilities.
As part of the Distribution business’s $12 million capex for the half, investments included spending on the above-mentioned digitisation (as much as 70% of all branch transactions are now digitised) and on technology platforms, as well as upgrading branches and showrooms.
Distribution highlights for the period included: the continued roll-out of PlaceMakers’ transport management system and insourcing of its delivery fleet and order tracking system; the go-live of the PlaceMakers eCommerce site (Shop. PlaceMakers) and trade app and further development of the PlaceMakers Trade Portal; a refresh of the Mico website
and Trade Portal; and upgrades to PlaceMakers’ Kaiwharawhara and Wairau Park branches.
For the second half, three new branches will be opening: PlaceMakers Warkworth; Mico Drury; and Mico Matamata.
Other recent news includes the announcement by Combined Building Supplies Co-operative (CBS Co-op) that it had signed PlaceMakers as its second and final national general building merchandise supplier.
“Having both Bunnings and PlaceMakers is like having the dream team,” says CBS Chairman, Carl Taylor.
The co-op is now nearing 250 members
and says it’s aiming for a thousand by the end of the year.
STEEL DRAGS ON BUILDING PRODUCTS
Looking now into the Building Products division, the first half was
all about “strong volume growth and improved operating performance” from plasterboard (Winstone Wallboards), insulation (Tasman Insulation) and laminates (Laminex).
The company put this down to the NZ residential building sector which “remained supportive for finishing trade work”.
In contrast, the Steel businesses saw “challenging trading conditions” and, although operating margins elsewhere in Building Products were on the improve, the division’s overall profit fell.
This decrease was attributed mainly
to the Steel businesses, which suffered from “a softening of volumes” from infrastructure (as did the pipe businesses Iplex and Humes) and from residential roofing, along with “sustained pressure on margins”.
Overall, Building Products’ revenues for H1 FY2020 were $645 million (negative 4% on the previous equivalent period), with a reported EBIT of $66 million, 24% down on last year’s first half.
Building Products’ margins, however, were reported to have improved on the prior period, “driven by price gains and positive operating leverage”.
www.fletcherbuilding.com
4 NZHJ | MARCH 2020
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