The Share Price Of FBU Tumbled Down After Annual General Meeting

  • Nov 20, 2018 AEDT
  • Team Kalkine
The Share Price Of FBU Tumbled Down After Annual General Meeting

On 20 November 2018, at Auckland, the annual general meeting of Fletcher Building Limited (ASX: FBU) was held where the shareholders were welcomed by the chairman of the company Mr. Bruce Hassall. The meeting was addressed by chairman Mr. Bruce Hassall and the CEO Mr. Ross Taylor. In the meeting, the results of FY2018 was shared with the investors. The revenue of the company was $9,471 million which has increased by 1% as compared to the previous year. This outcome was due to the heavy sales in the core business of the company. As a result of losses in the building and the interior business, this year the company incurred a heavy loss of $190 million. It was reported that there was a fall in the EBIT by 13%. The operating cash flow in FY18 was $396 million. The previous year the operating cash flow was $243 million. This indicates the improvement in working capital management. 

In New Zealand, the land and residential development unit’s performance was good. This resulted in growth in revenue and earnings. Also, a significant growth in the volume of unit sold was reported in FY2018 as compared to FY2017. The other factors which resulted in the growth of revenue were due to the distribution of building products, the steel division as well as the concrete. However, this growth was balanced by the cost pressure of the supply chain and the raw material.

Outside the B+1, Higgins was able to generate strong revenue and earnings growth. The south pacific business and the infrastructure encountered low revenue due to the roll-off of important projects. In Australia, an increase in the gross revenue was seen. However, the positive sales growth was done on a NZ dollar basis.

Further, there was no dividend declared inFY2018.

Based on the trading till date in FY2018, a half-yearly forecast was shared where the company expects that EBIT before significant items for HY2019 will be 10% less than the EBIT which is before significant items and losses in B+I that was reported in HY18. This forecast is based on emerging challenges in the Australian trading conditions as well as the timing of the house sales.

As per the FY2019 Guidance report, Fletcher Building expects that EBIT before significant items for FY2019 will range in between $630m to $680 million. The company is continuously targeting to reach the top end of the result, however this time it is careful that no shock comes from its Golden Bay Cement plant which might get impacted by the slowdown in the Australian residential market or due to a reduction in the earnings through the land development.

Although the company was unable to pay the dividend to its shareholders in FY2018, it aims to resume its dividend payment in FY2019. Any update regarding this will be shared in the half-yearly results in February 2019.

By the end of the day, the share price of the company tumbled down by 10.811% since morning. The share traded at A$4.62 by the close of the market on November 20, 2018. This price was reported to be close to the daily low. The market capitalization was $4.42 billion.


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