Fletcher posts $164m profit after turnaround
Fletcher Building chief executive Ross Taylor said yesterday he is standing by to hear the outcome of discussions between mana whenua over the Ihuma¯ tao occupation.
He was announcing Fletcher Building’s turnaround by posting an annual profit after tax of $164 million, compared with a $190m loss last year.
‘‘Recently, the prime minister requested that we put a hold on our development to provide more time for all parties to reach a solution, and that is what we did. The situation at Ihuma¯ tao is complex and we want a peaceful resolution,’’ Taylor said.
The Nzx-listed company has been planning O¯ ruarangi – a housing project on a 32-hectare site in Mangere, on the edge of the Manukau Harbour a half-hour drive south from downtown Auckland.
The land, which was until recently a privately owned farm for 150 years, sits next to the 100ha O¯ tuataua Stonefields Historic Reserve as well as the small village of Ihuma¯ tao. Fletcher planned to start earthworks last month but the development stalled after protesters blocked heavy machinery.
Taylor, who received a pay rise of $50,000 to $2.05m, said it had been an important transition year stabilising the company. The profit was achieved on marginally higher revenue, up 1 per cent to $9.3 billion for the year ending June 2019. The share price had fallen from $7 a year ago to $4.45 but in the immediate aftermath of the latest profit announcement it bounced back up to $4.57.
‘‘In New Zealand our core building products and distributions businesses delivered good results, maintaining strong market positions and revenues despite operating in a highly competitive environment.
‘‘The construction division stabilised which led to a return to profitability,’’ Taylor said.
In Australia, the performance reflected tough market conditions, rising costs and poor operating discipline in some areas.
Residential building activity remained high with a continued shift to apartments, and stable prices between $650,000 to $1m in Auckland.
Residential revenue was up 13 per cent to $526m. The company sold 735 dwellings and 20 sections compared with 613 dwellings and 101 sections last year.
In the lower margin market of Christchurch there were strong sales of Atlas Quarter apartments, higher Awatea development sales, and the first sales in One Central precinct.
Commercial construction was at historically high levels with $8b of work in place.
Australian residential and commercial construction sharply contracted, with revenue down 2 per cent to $3b, and earnings before interest and tax down by half to $57m.
Australian operations were being restructured, sites closed, properties consolidated, and some divisions merged.
Infrastructure work was also at historical highs, driven by large roading projects, although the pipeline of projects slowed in the past 12 months as Government priorities shifted towards safety upgrades.
Mico Plumbing and Placemakers grew strongly with a new Placemakers opened in Rotorua.
Some gains were offset by costs of the new Snappy DIY stores.
The steel division revenue from roofing increased but manufacturing activity was subdued and earnings declined overall as a result of intense competition. Concrete was solid but revenue was down marginally due to a mill outage. Cement supply chain improvements included coastal shipping to New Plymouth, additional barge capacity between Portland and Auckland, and completion of a readymix plant near Auckland airport to boost the network of the Firth subsidiary.
Taylor confirmed the recently proposed return of $300m to shareholders by way of a share buyback.
Taylor said the company’s debt levels were well below targets.
The company reinstated dividend payments this year with a total dividend for the year of 23 cents per share.