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Fletcher Building said earnings improved in the first part of its current financial year as greater efficiency boosted its margins. The shares were up 11 percent.
Pre-tax earnings rose 55 percent to $ 227 million in the four months through the end of October, the company said. The figures exclude extraordinary items after the restructuring of the construction company.
Fletcher Building suffered a financial hit in the year to June 30, posting a loss of $ 196 million after it restructured its business to reduce its cost base, reducing staff, products and facilities as it was downsized to to be able to cope with the interruptions caused by Covid-19. .
“We were hit hard in fiscal 2020 by the Covid-19 restrictions, resulting in a significant profit loss for the $ 196 million group, so we are delighted to have started the new year off right,” said the CEO Ross Taylor.
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In the first four months of the current financial year, profit margins increased to 8.4 percent from 5.5 percent, reflecting operating performance and efficiency programs implemented in the past two years, it said.
Shares in the construction company rose 50 cents to $ 5 after the announcement Tuesday morning.
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Fletcher Building CEO Ross Taylor is pleased to have started the new year off right.
Fletcher Building is the nation’s largest integrated manufacturer and distributor of building materials.
Taylor said his clients expect volumes to remain at current levels until the beginning of next calendar year. However, there is uncertainty in the second half of the financial year, with the impact of broader macroeconomic factors in the New Zealand and Australian markets still unclear, and December and January are always lower trading and profit months for the group, said. said.
In the first four months of the year, revenue increased 1 percent to $ 2.698 billion, which Taylor said was supported by tough business conditions in both New Zealand and Australia, especially in the residential sector.
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Fletcher Building took significant cost-saving measures in the wake of the coronavirus.
Revenue at its New Zealand core division increased 4 percent to $ 1.327 billion, with companies exposed to particularly tough finishing operations.
Demand for new homes was robust, with 342 units taken to profit from its residential business, consistent with the company’s goal of achieving 700-800 home sales for the full year.
Pre-tax earnings for its core New Zealand business increased 30 percent to $ 158 million, led by a 32 percent increase in concrete earnings to $ 43 million and a 32 percent gain in product earnings. of construction to $ 72 million.
Residential and development profits doubled to $ 43 million due to strong home sales, and planned land developments remain on track to be completed this financial year.
Australian profits rose 65 percent to $ 39 million, as lower costs offset lower overall revenue.
Corporate costs fell 15 percent to $ 16 million.
Taylor said the company’s cash flows and balance sheet remain strong, with net debt of $ 388 million and available liquidity of $ 1.4 billion as of Oct. 31.
The company will update shareholders on its first half earnings expectations at its annual meeting on November 25. Further updates will be provided when the company publishes its first half results on February 17 and on its Investor Day in May 2021.
