Fletcher Building's return to profit and a $300 million share buyback met a lukewarm response from analysts and investors with the result being well flagged and headwinds in Australia continuing.
"Investor confidence in FBU is at a low ebb with a material equity raise (trading below the rights issue price of April 2018) and the divestment of Formica at fair value unable to spur any sustained uplift in investor sentiment to the stock," noted Arie Dekker, head of research at Jarden.
Fletcher delivered few surprises, following its investor day in Sydney in June, but was able to stem a recent tide of bad news and report a $164m annual net profit for the year to June 30, compared to a net loss of $190m the previous year.
Earnings before interest and tax (Ebit) came in at $631m, below the midpoint of guidance and reflecting a softer performance from NZ Steel due to margin pressure.
The company's Australian business continues to struggle with Ebit down 50 per cent from $114m last year to $57m this year. The company said that performance reflected tough market conditions, rising input costs and poor operating disciplines in some areas.
"We saw little in the result that is likely to buoy confidence with FBU reiterating the outlook commentary from June to the word - still healthy NZ outlook; Australia contraction continuing," Dekker noted.
Grant Swanepoel, head of institutional research at Craigs, also said the result was little surprise, given how much was released in June when the investment community had been "anchored" by so much news then.
"This was all pre-released so we had a chance to react back in June," Swanepoel said. "We were unimpressed at the investors' day. Today, we're like 'at least it's not got any worse'."
He was unsurprised about lack of mention of Ihumātao because Fletcher chief executive Ross Taylor had expressed a reluctance to talk about individual projects: "But when something is consented and someone else scuppers it, you've got to ask how much risk do we have in the New Zealand market? More than we expected."
Taylor's reluctance was perhaps due to legal ramifications, he said. The site at Ihumātao was part of a large land bank Fletcher had amassed but the issue there was clearly yet to be resolved, Swanepoel said.
Across the business, Fletcher made revenue of $9.3 billion, slightly down on last year's $9.4b.
Earnings from its building products division fell from $132m to $127m, Ebit from the distribution division was unchanged at $104m, steel division Ebit fell from $49m to $33m and concrete Ebit fell from $90m to $84m.
Significant items of $234m were incurred through the divestment of the company's international businesses and through restructuring charges taken to reset the Australia division.
Chief executive Ross Taylor said 2019 was an important transition year for the company with significant progress on its five-year strategy."
"In New Zealand, our core building products and distribution businesses delivered good results, maintaining strong market positions and revenues despite operating in a highly competitive environment," Taylor said.
"The construction stabilised which led to a return to profitability and we are on track to complete the remaining legacy B+I (Building + Interiors, Fletcher's high-rise construction unit) projects within the provisions we set in February 2018," he said.
The B+I unit lost the best part of $1b over 18 months on projects such as the Christchurch Justice Precinct and the still-to-be completed Sky City hotel and convention centre and Commercial Bay projects.
Turnaround plans were well underway to reset the business in Australia and deliver growth in 2020, he said.
Fletcher shares recently traded up 4.38 per cent at $4.77 but have fallen 35 per cent in the past 12 months.