Fletcher Building reported a 23 per cent drop in full-year operating earnings, in line with its profit warning last month when the building products and construction company fired its chief executive, and said operating cash flows will improve in 2018 as will returns from construction.
Operating earnings before one-time items were $525 million in the 12 months ended June 30, from $682m a year earlier, the Auckland-based company said in a statement. Impairments and other one-time charges amounted to $252m, including $69m against its building products division and $153m against distribution. Group sales rose 4 per cent to $9.4 billion.
Fletcher dumped CEO Mark Adamson amid cost blowouts at two major construction projects - widely believed to be the Auckland convention centre and the Justice Precinct in Christchurch - and the company also disclosed a $220m impairment against its Iplex Australia and Tradelink business units. Today the company said it expects "a significantly improved performance" at its construction business because of a turnaround at its buildings + interiors unit, which had negative cash flow in the 2016 year.
Still, overall costs may rise. "Following a year where corporate costs were reduced significantly by the reduction of incentives paid to some staff, FY18 will likely see a return of corporate costs closer to normalised levels," it said, adding that it also expects a temporary increase in net debt.
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It will pay a final dividend of 19 cents a share, down from 20 cents in the previous year.