The new Clever Core house component building factory in Auckland. Photo / Fletcher Bulding
The new Clever Core house component building factory in Auckland. Photo / Fletcher Bulding
Fletcher Building has delivered a strong result, increasing bottom-line profit 42 per cent to make $432 million for the full year.
The company at the centre of the Gib crisis made $8.4b revenue in the year to June 30, 2022, up 5 per cent from $8.1b the previous year and has declared a final dividend of 22 cps, taking the full annual shareholder payout to 40 cps.
The $432m net profit after tax was up from last year's $305m.
Earnings before interest and tax were up 13 per cent at $756m - slightly ahead of Forsyth Barr's forecast - with a strong second half margin of 9.5 per cent.
Chief executive Ross Taylor said the year had not been without its challenges and he particularly cited the Gib crisis.
"Global and national supply chain disruptions continued into the third year of the Covid-19 pandemic. In New Zealand, surging plasterboard orders following the first quarter lockdown outstripped our ability to supply, despite our manufacturing facilities running at record levels.".
In recognition of the company's key role as a local manufacturer in keeping the market supplied, Fletcher had carried out a range of measures to address the shortage including operating production lines 24/7, running down reserve stocks, importing additional product, and establishing an emergency supply pool, Taylor said.
"In the longer term, our new $400m manufacturing facility in Tauranga is scheduled to begin operations in May 2023 which will more than meet current and future demand levels."
Ross Taylor, chief executive of Fletcher Building. Photo / Michael Craig
In forecasting performance in the June 30, 2023 year, Taylor said: "We expect to see ongoing profit growth, as there continues to be a solid pipeline of committed work in our end markets, and there is unlikely to be another Covid-19 forced shutdown of our operations. Our balance sheet and overall financial position are strong and we plan to keep it that way."
Fletcher is targeting an Ebit uplift of $100m for the 2023 year.
The company has cancelled 41.2m shares, spending $274m in its share buyback programme.
Taylor thanked more than 14,700 staff here, in Australia and across the Pacific "who are ultimately responsible for our strong performance and momentum these past twelve months. I also wish to extend my gratitude to our shareholders, customers, and suppliers for their continued support".
Taylor will hold a conference call with media at 10am today.
Australia was the biggest divisional earner, making $2.7b gross revenue, up on $2.6b last year. The building products division which includes Gib made $1.6b, up from $1.4b. Construction made $1.5b, up from $1.4b, concrete made $881m, up on $849m and residential and development made $692m which was down on the previous $743m.
"Overall, the divisions performed very well during the year," Taylor said, citing ongoing operational performance which had lifted margins. Although house sale volumes were lower than last year, margins were strong, he said.
"We are forecasting an Ebit profit uplift in FY23 of at least $100m on FY22," Taylor said of the outlook, citing further margin improvements, an established pipeline of development opportunities that will start to mature in the next few years. The balance sheet was strong "and we intend to keep it that way".
The investor presentation said the first half of the June 2022 year was significantly impacted by Covid lockdowns, mainly in New Zealand. But the second half was "materially ahead of the prior year, reflecting ongoing performance improvement and growth across the group."
Fletcher has $745m undrawn credit lines and cash on hand of $351m, with total liquidity of $1.1b. Group gearing is 15.1 per cent, up on last year's 4.4 per cent.
Before today's result, Forsyth Barr analysts Rohan Koreman-Smit and Paul Koraua had forecast earnings before interest and tax (ebit) for the full year before significant items to rise 12 per cent to around $750m.
"We don't expect many surprises, with most of the detail pre-announced at the June investor day," they noted in an outlook piece.
"We expect the result will reaffirm a business that is seeing strong demand. Given the change in the housing market, all eyes will be on outlook statements. While Fletcher does not typically provide guidance at its full-year results, we expect reiteration of its FY23 ebit target of $850m," they said.
They projected net profit after tax to rise from June 30, 2021's $413m to an estimated $459.4m for the June 2022 year.
That will largely be driven by the New Zealand performance and a strong contribution from housing development via Fletcher Living, whose performance is forecast to rise 40 per cent.
They said high house prices have been underpinning growth in Fletcher's residential activity.
Keith Chau and Ben Kairaitis of MST Marquee in Australia had projected ebit to be around $747m and net profit after tax to be $455m. They put a "buy" rating on the shares, with a target price of A$7, noting it had only been trading around A$4.83.
Shares have been trading on the NZX around $5.40, down 30 per cent annually, giving a market capitalisation of $4.2b. On the ASX, Fletcher was yesterday trading around A$4.94, down from A$7.24 last August.
