Fletcher Building Limited Analysis

Overview

Fletcher Building (‘the Company’) was established in March 2001 as a stand-alone entity from the Building shares of Fletcher Challenge.

Today the Company is a leading provider of building products and solutions, operating some 25 businesses across New Zealand, Australia and the South Pacific, and employing around 15,000 people.

Fletcher Building manufactures building products, from insulation that keeps homes warm and dry, to cement and steel - the foundation of built structures the world over.

Fletcher Building’s retail businesses distribute these products to tradespeople across Australasia.

Fletcher Building also builds homes, commercial buildings and infrastructure that create communities, improve productivity and contribute to the quality of life for people living and working in cities and regions across the Company’s markets.

Fletcher Building operates through six divisions – Building Products, Distribution, Concrete, Residential and Development, Construction and Australia.

Performance

The following information was extracted from Fletcher Building Limited's Half Year results, released 14 February, 2024:

• Revenues solid overall but tough trading conditions vs. 1H23, esp. in NZ residential sector volumes -20%
• Group EBIT $264m, lower YoY due to weaker markets; partly offset by cost-out & higher Fletcher Resi EBIT
• Group EBIT margin 6.2% with resilient Materials & Distribution EBIT margin of 7.4% in context of activity levels
• Net loss $120m – impacted by disappointing $180m provisions on legacy projects & $122m Tradelink non-cash write-down; decision made to divest Tradelink
• Trading cash flows (ex legacy) $176m – material uplift YoY from effective working capital management
• Leverage ratio 1.8x in line with prior guidance, liquidity strong at c.$0.9b