Fletcher Building loses $227 million, ‘difficult’ year ahead

Fletcher Building reported a full-year loss of $227 million, with revenue unchanged from the prior year.

The construction company’s basic profit was $509 million, lower than expected but still 35 percent lower than a year earlier.

Key figures for the 12 months ending in June compared with the previous year:

• Net income of $227 million vs. $235 million (including $301 million in non-recurring items)
• Revenue $7.683 billion vs. $7.679 billion
• Underlying profit $509m vs. $785m
• Full-year dividend nil versus 34 cents per share

Acting CEO Nick Traber said the result reflected falling demand, inflation and competitive pressures.

He added that market volumes fell during the year, with New Zealand down 25 per cent and Australia down 15 per cent compared to the previous year.

“We expect the coming year to remain challenging, with macroeconomic pressures likely to persist throughout the year,” he said.

“At this point in time, we are projecting fiscal 2025 market volumes across our materials and distribution businesses to be 10 to 15 percent lower year-over-year compared to fiscal 2024, but we remain vigilant for further market weakness.”

He added that the loss was primarily due to a $117 million non-cash impairment and a write-down of the carrying value of the Higgins business and additional reserves of $180 million required to complete older construction projects announced earlier this year.

“After taking into account the discontinued Tradelink operations, we recorded a net loss after tax of $227 million, compared to a net profit of $235 million in fiscal 2023.”

Fletcher’s return on funds employed before significant items was 10 percent, compared with 17 percent a year earlier.

I am looking for investment capital

Traber said the housing and development division performed well, posting strong profit margins and a return on capital of 15 percent.

“We believe the time is right to explore equity partnership opportunities in the residential and development sectors to invest in and drive the next phase of the company’s success.

“We have therefore engaged Jarden to explore options with local and international investors.”

Leaking pipes in the spotlight

Mr Traber said the company’s subsidiary, Iplex, remained focused on solving plumbing problems in Perth and was awaiting legal action.

“Constructive negotiations are ongoing and Iplex intends to try to reach a preliminary agreement with the government and key parties in the near future,” he said.