Fletcher Building Industries Limited Analysis

Overview

The company was listed under the name Fletcher Building Finance Ltd ("FBF") on 20 December 2002.

Fletcher Building Finance Ltd is a wholly owned subsidiary of Fletcher Building Ltd, and is the issuer of capital notes which are guaranteed by Fletcher Building on an unsecured subordinated basis.

On 27 August 2010 it was announced that the company will no longer lend to companies within the Fletcher Building group. FBF is regarded as a non-bank deposit taker by the Reserve Bank of New Zealand. As such, it is subject to the ongoing requirements of The Reserve Bank of New Zealand Act 1989. Recent amendments to the Act mean that FBF is no longer a preferred funding vehicle for the Fletcher Building group.

With effect from 27 August 2010 the company will become a holding company, and will purchase 20% of the shares in Fletcher Building Holdings Limited ("FBHL"). FBHL is a corporate holding company and currently holds most of the shares in Fletcher Building's New Zealand subsidiaries.

On 01 October 2010 the company changed its name to Fletcher Building Industries Limited ("FBI"), to reflect that it is no longer a funder or lender to the Fletcher Building group, but is instead an investor in Fletcher Building's New Zealand assets.

On 28 March 2011 Fletcher Building Industries ("FBI") and Fletcher Building Ltd ("FBU") consolidated their capital notes programmes and FBU's obligations were transferred to FBI effective from 28 March 2011.

Performance

The following information was extracted from Fletcher Building Industries Limited's Full Year results, released on 21 August 2024:

Auckland, 21 August 2024: Fletcher Building Industries Limited (the Company) is a wholly-owned subsidiary of Fletcher Building Limited (the Group), and is the issuer of capital notes, which are guaranteed by the Group on an unsecured subordinated basis.

Financial results - Year ended 30 June 2024

Net loss - $0.6 million

Net assets - $660.3 million

The Company reported a net loss of $0.6 million for the year ended 30 June 2024 compared to net earnings of $67.8 million in FY23. This was a consequence of the sharp market slowdown in New Zealand, with revenues for the New Zealand materials and distribution divisions of the Group (Building Products, Distribution, and Concrete) materially lower than the prior year, and additional provisions on legacy projects and a non-cash impairment recognised in the Group’s Construction division, all having a material impact on the Company’s share of profits from its investment in its associate. As the Company owns 20 per cent of the shares in Fletcher Building Holdings New Zealand Limited, which in turn owns the shares in Fletcher Building’s New Zealand operating subsidiaries, its investment in that Company is equity accounted.

The financial performance of the Company should be considered in conjunction with the financial statements of the Fletcher Building Group, including the Group’s assessment of the preparation of the financial statements as a going concern.