Andrew Reding, the new chief executive of Fletcher Building.
Andrew Reding, the new chief executive of Fletcher Building.
Fletcher Building has incurred a rising loss as new chief executive Andrew Reding cites a challenging period and tough trading conditions.
The company made a $134 million net loss after tax for the December 31, 2024, half-year, up on the previous $120m net loss.
“The first half of the2025 financial year continued to be a challenging period for our businesses as very difficult trading conditions continued across all our segments,” Reding said.
This included a broad-based slowing of demand, intense competitive forces and persistent inflationary pressures.
The company’s revenue fell 7% from $3.8 billion to $3.5b.
“The businesses navigated these obstacles by focusing on optimising operational performance and tightly managing the things within our control,” Reding said today.
“We are pleased with the progress achieved to date on our key priorities which have been: resetting governance and leadership roles of the group, the ongoing strategic review, the group-wide cost-reduction programme; cash, being prudent with capital expenditure and progressing the resolution of outstanding legacy issues,” he added.
Construction revenue rose 16% due to higher work volumes from infrastructure projects.
Earnings before interest and tax from continuing operations and before significant items was $167m, down from $263m in the prior period.
Fletcher Building says there has been intense price competition in the residential sector.
The lower market volumes for the materials and distribution divisions were the most significant driver of the earnings reduction, contributing $80m lower ebit before significant items.
But construction ebit before significant items was up $21m half-on-half.
Forecasting today’s results, Forsyth Barr analysts Rohan Koreman-Smith and Paul Laxton Koraua expected ebit would fall 38% to $162m.
That would be driven by broad-based volume declines and competitive margin pressure, they said in a half-year results preview published on Monday.
While forward indicators improved, data and anecdotal evidence suggested construction activity was still rebasing in the December 2024 quarter, they said.
That would make 1H25 likely to remain challenging.
“With cyclical challenges largely understood, attention will be on the new management team’s strategic direction, including operational improvements, business rationalisation and capital management.
“We expect commentary to remain qualitative and high level, as it is likely too early for firm decisions to have been made,” they wrote.
The Commerce Commission said in November it was taking action against Fletcher Building’s Winstone Wallboards over customer rebates on its Gib-branded plasterboard.
Winstone has about 94% of New Zealand’s wallboard market and Fletcher today acknowledged the actions but said it would “vigorously defend” itself.
The Forsyth Barr analysts have a neutral rating on Fletcher, expecting residential development volumes to be -5% with build costs impacting margins.
Tracking suggested current sales run rates were positive, with early 2H25 figures up on the prior year, they said.
“Fletcher Living will likely be the first Fletcher division to benefit from lower interest rates,” they said.
