Fletcher Building trading update: Earnings up $80m in first four months of year

Fletcher Construction's Hobson Street air bridge. Photo / supplied

Fletcher Building pushed earnings higher in the first four months of this financial year, releasing new financial information about its performance before this month's annual general meeting.

In a trading update out today, the business said group EBIT before significant items was $227m, $80m up on the previous period from July 1 till October 31.

"This was achieved predominantly through a 2.9ppts lift in profit margins across the group, reflecting the operational performance and efficiency programmes implemented over the last two years," the company said.

Group revenue only rose 1 per cent but Fletcher said the balance sheet remained strong, with net debt of $388m and liquidity of $1.4b.

Earnings in the New Zealand core were up 30 per cent, led by the concrete and building products divisions.

Residential and development earnings were materially higher due to strong house sales, while planned land development transactions remain on track for completion in the remainder of FY21.

Construction earnings were in line with the comparative period.

Earnings from Australia increased as cost-out benefits offset the lower overall revenues. Corporate costs remain well-controlled and were slightly lower than the comparative period, the company said.

Chief executive Ross Taylor referred to the pandemic and the five-week shutdown from late March.

"Through all the disruption and uncertainty of the past year, our people have adapted and responded superbly, maintaining a focus on delivering for our customers. We were heavily impacted in FY20 by the Covid-19 restrictions, resulting in a significant earnings loss for the group of $196m, so we are pleased to have begun the new year well.

"As we look ahead, our customers are pointing to volumes remaining at current levels through to the start of the new calendar year. However, there is uncertainty in the second half of the financial year, with the impact of broader macro-economic factors on our markets in New Zealand and Australia not yet clear.

"Also, December and January are always lower trading and earnings months for the group. At our annual shareholders' meeting on November 25, we intend to provide earnings guidance for 1H21," Taylor said.

The company will update further on trading conditions in its half-year results announcement on February 17 and at an investor day planned for May.