PlaceMakers is losing market share to rivals like Bunnings. Photo / Greg Bowker
Fletcher Building's PlaceMakers chain is being pounded by the construction downturn, suffering big earnings and sales drops.
An analyst presentation posted on the NZX shows half-year sales down 15 per cent, an $84 million decline.
Operating revenue more than halved from $42 million to $18 million.
Margins
have also been slashed as PlaceMakers struggles in the spending downturn.
Fletcher cited the competition from rivals and the building slowdown as critical factors influencing PlaceMakers' performance.
Fletcher said the chain was battling "highly competitive market activity on a declining sales base".
The $12 billion construction sector has hit the skids with the number of new houses being built falling from about 30,000 annually earlier this decade to about 17,000 now.
An analyst said the true extent of issues for Fletcher across the wider business would not be revealed until August when it will issue its annual report for June 30, 2009.
Shares closed yesterday at $6.07, down 22c for the day but up from an annual low of $5.13.
PlaceMakers has 62 outlets and operates only in New Zealand. It has a 34 per cent market share of the core building materials sector, is the New Zealand leader in building materials sales and has a strong trade focus. PlaceMakers has a share of more than 80
per cent in supplying the trade sector, it said.
Rivals like Bunnings have been expanding, a point Fletcher highlighted in the presentation citing the decline of cash sales as its competitors gain share.
PlaceMakers' advantage was its ability to sell half the businesses to owner/operators, it said.
"The model attracts the right people," Fletcher said.
Jonathan Ling, Fletcher's chief executive, said late last year that staff had been shed from PlaceMakers, Winstone Wallboards and Laminex. PlaceMakers sells 74,000 product lines and has 20 manufacturing plants.
Fletcher owns the stores as joint ventures with local business partners.
