Fletcher Building (FBU) H2 2024 earnings summary

Executive summary

• Reported results on a continuing operations basis due to the Tradelink divestment, with Tradelink treated as a discontinued operation and FY 2023 restated for comparability.

• FY24 earnings impacted by weak market conditions, significant legacy project provisions, and write-downs, despite strong cost and cash control measures.

• Net loss of NZD 227 million includes NZD 180 million provision on legacy projects, NZD 117 million Higgins impairment, and NZD 141 million loss from discontinued Tradelink operations.

• Trading cash flow (excluding significant and legacy items) rose to NZD 784 million, reflecting effective working capital management.

• Leverage ratio at 1.99x and net debt of NZD 1.8 billion, both within or below prior guidance; liquidity remains strong at NZD 1.1 billion.

Financial highlights

• Group revenue flat year-over-year at NZD 7.7 billion; EBIT from continuing operations down 35% to NZD 509 million, within guidance.

• Non-cash write-down of NZD 117 million on Higgins and legacy construction provisions of NZD 180 million.

• Net earnings before significant items from continuing ops fell to NZD 183 million from NZD 447 million; basic EPS before significant items dropped to 23.4c from 57.1c.

• No FY24 dividend declared due to lender agreements and net loss position.

• Group ROFE declined to 10% from 17.1% year-over-year.

Outlook and guidance

• FY25 market conditions expected to remain challenging, with macroeconomic pressures persisting and market volumes forecasted to decline 10%-15% from FY24.

• CapEx for FY25 planned at NZD 325 million, with growth CapEx limited to critical projects.

• Leverage likely above target range at Dec-24 due to legacy cash flows, but strong seasonal cash flows expected in 2H25.

• Tradelink divestment proceeds of NZD 170 million expected in September.