Construction company and materials manufacturer and distributor Fletcher Building is in a turn-around phase, changing last year's losses into profits this year and telling shareholders they will bet a dividend of 8 cents a share, paid out in early April.
The business has just announced it has converted last year's -$273m interim loss to a net earnings profit of $89m and last year's loss in EBIT before significant items of -$322m to a profit of $285m.
"Fletcher Building today announced net earnings of $89m for the six months ended 31 December 2018, compared with a loss of $273 million for the first half of FY18," the business said.
"EBIT before significant items was $285m compared with a loss of $322m in the prior period. Half-year earnings were 8 per cent lower when compared with EBIT before significant items (adjusted for B+I provisions) of $309m for the first half of FY18. This is within the guidance given at the annual shareholders meeting in November 2018. As a result of the return to profitability the Fletcher Building board is pleased to declare an interim dividend of 8 cents per share to be paid on April 10," Fletcher said.
Revenue dropped from $4.8b to $4.7b.
Fletcher had last year forecast earnings or EBIT in the interim result to December 31, 2018 would be 10 per cent down due to a cement plant outage, the slowing Australian economy and lower land development profits, Fletcher forecast before today's result.
Ross Taylor, Fletcher chief executive, said today the business was making "good progress" on its strategy to refocus the business back to its core here and and Australia.
"We have completed the divestment of Roof Tile Group and signed an agreement to sell Formica for US$840m which we expect be complete by the end of the financial year," Taylor said.
"Our operating results across our core New Zealand businesses have been solid in the first half and we are on track to close out the B+I projects within the current provisions. In Australia, we have been impacted by the sharp decline in the residential market as well as higher input costs. We are focused on setting the Australian business up for improved performance from FY20 which will include a reset of the cost base," Taylor said in a statement.
And shareholders got further good news from the company this morning in the form of a $20m uplift: the company forecasts earnings for the full year to June 30, 2019 to be $650m to $700m, up on the guidance given at the November AGM of $630m to $680m.
"The $20m increase in earnings guidance is due to the treatment of the Formic business as 'held for sale' and hence the assets are not subject to depreciation in the second half of FY19," Fletcher said today.
Just on $54.9m is being withheld from Fletcher Construction for being late finishing two Auckland projects: the NZ International Convention centre between Hobson and Nelson St and the 39-level waterfront Commercial Bay between Quay St, Lower Albert St and Customs St.
Last week, SkyCity Entertainment Group said its $703m convention centre would not open until the second half of next year, despite having bookings for more than 7000 of delegates before that date, so it withheld $39.5m from Fletcher Construction. That centre was originally planned to open this month.
• SkyCity convention centre won't open till second-half of 2020
• Precinct Properties' Commercial Bay project delayed: Fletcher payments withheld
• Fletcher performance expected to be 10% behind last year
Yesterday, Precinct Properties announced it had withheld $15.4m from Fletcher Construction due to late delivery of its $1b Commercial Bay shopping/restaurant/office tower on the waterfront.
Fletcher has a market capitalisation of $4.5b, employs around 10,000 people and closed at $5.28 last night on the NZX.