Fletcher looks to KiwiBuild after $190m loss

Fand letcher Building bosses are due to meet with Housing Minister Phil Twyford today to discuss how it can work with the Government on housing.

Chief executive Ross Taylor said after delivering the company’s $190m loss yesterday that Fletcher Building was working on how it can incorporate some KiwiBuild homes in developments, Bloomberg reports.

KiwiBuild is Twyford’s flagship housing programme and aims to build 100,000 houses over the next 10 years.

Taylor, Bloomberg reports, said Fletcher Building’s panelisation plant is expected to be up and running in the next 12 months and will supply close to 300 houses per year. Fletcher would also talk to the Government over whether demand from the likes of KiwiBuild will mean it has to expand that facility, Taylor said.

The company yesterday unveiled its loss for the year to June 30 — only the second time since listing on the NZX in 2001 that it slipped into the red — and said shareholders will get no dividends for the full year.

It declared a loss of $46m in 2009 and said yesterday earnings guidance for the existing financial year would not be provided until the annual shareholders’ meeting.

The $190m loss for the June 2018 year is a big turnaround from the $94m profit for the June 2017 year.

“In line with the company’s dividend policy to pay dividends in the range of 50-75 per cent of net earnings before significant items, no final dividend was declared in FY18. The company expects, subject to satisfactory trading performance, to be in a position to resume dividends in FY19”, it said.

Operating earnings, before significant items, and excluding Building + Interiors, were $710m which Fletcher said was within the company’s earnings guidance of $680m to $720m.

Revenue for the year was $9.4b, up 1 per cent year-on-year “and driven by a solid sales performance across core businesses in New Zealand and Australia, offset by a reduction in construction revenues”.

Cash flow from operations of $396m was up $153m on the prior year, “reflecting improved working capital management, offset partly by continued outflows on the B+I projects”.

“In New Zealand the residential and development division performed strongly, growing revenue and earnings and significantly increasing the volume of units sold from 499 in FY17 to 714 in FY18,” Fletcher said.

The distribution, building products, concrete and steel divisions all grew revenue, however this was offset in a number of businesses by raw material and supply chain cost pressures.

Shane Solly, Harbour Asset Management portfolio manager, director and research analyst said yesterday’s result indicated the company was forming “a more solid foundation”.

Fletcher Building shares closed yesterday at $6.51.