Fletcher Building annual earnings at lower end of range

Fletcher Building's earnings for 2023 will be a shade below guidance.

Fletcher Building expects its operating earnings for the year to June 30 to be at the bottom end of a previously advised range.

The building materials and construction firm now expects earnings before interest and tax (ebit) of about $800 million, compared with previous guidance of $800m to $855m.

Ebit margins, before significant items, are expected to be greater than 9 per cent, chief executive Ross Taylor said.

“This represents a solid performance as we have seen market activity soften in the second half, along with the ongoing impact of wet weather,” he told the NZX.

The company had been actively investing capital in growth opportunities from within the business as well as making sensible “bolt-on” acquisitions.

“Progress on safety and sustainability continues to be strong, and we are focused on driving greater improvements in the customer, innovation and people areas of our strategy,” he said.

“With the fundamentals of the Australian and New Zealand building sectors being supported by long-term macro tailwinds, and with a strong balance sheet, Fletcher Building is well positioned for growth over the medium term.”

Fletcher Building’s house sales in 2023 would be around 650, below its previous target, but “proving some resilience” in a slow New Zealand housing market.

In line with a prior guidance, cash flows had been strong in the second half.

“For 2024, our current outlook is for market volumes in our materials and distribution businesses to soften by a further about 8 per cent, and we are targeting 700-800 house sales,” Taylor said.

In construction, the company’s legacy projects were nearing completion, with some risk still to manage.

“But our go-forward business is well positioned with a more focused and lower-risk order book,” the company said.

Fletcher Building’s shares last traded at $5.24, up 3c, having gained 7.8 per cent over the past 12 months.