Fletcher Building made $82 million net profit after tax for the latest half-year, down on the $89m it made previously, but chief executive Ross Taylor said the outcome was in line with the company's expectations and those set at the November AGM.
Fletcher attributed the drop to a decline in revenue as the construction division finished big projects as well as a downturn in the Australian market.
Fletcher declared its result for the half-year to December 31, 2019, making $3.9b revenue, EBIT before significant items of $219m, down on the $248m in the previous corresponding period.
The $515m to $565m EBIT full-year earnings guidance range was reconfirmed.
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Taylor said this morning: "HY20 results are in line with our expectations and those set out at our annual shareholders' meeting in November 2019. Our business is now stabilised and focused, providing the foundation to drive consistent performance and growth into the future."
Fletcher announced its intention to sell its Rocla business, bought in 2005. Rocla says it is a leading Australian supplier of concrete solutions to the building and construction industry.
Group revenue of $3.9b was 5 per cent down on HY19 "as anticipated, owing to reduced revenue on legacy construction projects and tougher market conditions in Australia."
Fletcher declared an interim dividend of 11cps to be paid on April 9. Dividends rose from 8cps in the 2019 half-year to 11cps in the 2020 half-year.
EBIT before significant items was $219m. Trading cash flow from continuing operations, excluding legacy projects, increased to $88m from $36m in HY19 due to ongoing improvements in working capital.
Net debt spiralled, from $325m in FY19 to $766m in HY20 "from share buyback and legacy construction projects". But Fletcher said it still had undrawn credit of $925m and cash on hand of $570m.
Revenue from New Zealand operations was steady but construction revenues fell "as legacy project complete" and Australian revenue was down due to residential and infrastructure market declines.
Construction division gross revenue fell from $866m in the previous half-year to $744m in the latest period. But Fletcher indicated a strong order book, declaring a revenue backlog of $1.4b, up on the previous $1.1b. No changes were made to provisions on those legacy projects which include the $1b Commercial Bay for Precinct Properties and SkyCity Entertainment Group's $703m NZ International Convention Centre.
On the house-building front, Fletcher is targeting 800 to 900 new housing sales for the full year, compared to 755 last year. The first houses have been built from the Clever Core pre-fab manufacturing site which the business opened last year.
But revenue from the residential and development fell, from $251m to $224m. EBITDA was also down from $44m to $36m.
Gross revenue in the distribution division, which includes PlaceMakers, rose from $809m to $824m but building products fell from $672m to $645m.
Before the result, analysts said the company would give an update on the impact of the NZICC fire after accounting for insurance and adjustments to timelines.
Fletcher shares were yesterday trading around $5.18, down on the $5.65 of January 30.