Fletcher Building released its full-year result today. Photo / Getty
Fletcher Building released its full-year result today. Photo / Getty
Fletcher Building has announced a group net loss after tax of $227 million, a turnaround after last year’s $235m profit.
It cited construction legacy provisions and losses from its civil business Higgins and Australian plumbing operations Tradelink which it has agreed to sell.
Significant items from continuing operations were $333m due to a $117m non-cash impairment and writedown in the carrying value of Higgins and $180m in provisions for its legacy construction projects including the NZ International Convention Centre.
No dividend will be paid for the full-year, whereas last year the company paid 34cps.
In the year to June 30, the company had revenue of $7.6 billion.
Ebitda before significant items fell from $785m to $509m.
The $227m net loss was caused by $180m legacy provisions, $100m Higgins NZ impairment and write-down and $141m loss from discontinued operations at Australian plumbing business Tradelink.
The company cited $376m construction legacy outflows “mainly due to the NZICC steel remediation costs”.
In May, the company cited poor trading conditions, intense price competition and lower building product sales to downgrade its full-year profit forecast from $540m to $640m Ebit before significant items to $500m to $530m.
Conditions in the company’s second half prompted that. Net debt by June 30 was forecast to be $1.9b to $2b.
Fletcher cited a combination of weaker revenues and gross margin pressure in certain building products businesses, notably Iplex NZ and steel, where markets were especially soft.
But its residential development activities were doing well and the company expected to report it had built around 900 new homes in the full year, Fletcher said on May 13.
The acting chief executive is Nick Traber, yet acting chair Barbara Chapman said yesterday he is leaving, returning to Switzerland.
But the appointment of a new chief executive to replace Australian Ross Taylor was resolved, after yesterday’s announcement that former Carter Holt Harvey chief executive Andrew Reding would take over from September 30.
Reding is NZ Shareholders’ Association chairman and a former Fletcher boss, having run its wood panels division from 1997 to 2001 and building products from 2001 to 2006.
Analysts forecast leaky Perth pipes could feature prominently in today’s result.
Andrew Reding will become chief executive and managing director of Fletcher Building. Photo / Supplied
On today’s result, Forsyth Barr had forecast several areas of discussion.
“The lull in construction activity, high debt levels, NZICC, Western Australia pipes, and management changes likely to dominate result, but all largely known,” an earnings forecast said.
“Fletcher is still in search for a new.... chair and board members, as well as having some unresolved issues with the WA pipes which we expect will be a topic of discussion at the result.”
The consensus of analysts’ forecasts was that the company would make $8.1b revenue, ebidta of $887.1m and normalised net profit after tax of $211.1m, Forsyth Barr noted.
On August 12, Fletcher said it had sold its Australian plumbing supplies and distribution business Tradelink for A$170 million ($186m) and will use that to repay debt.
It bought the plumbing supplies and bathroom renovation retailer when it took over Crane Group in 2011.
Fletcher’s market cap has shrunk from $3.1b in April to $2.7b in May and now $2.6b.
