Are Fletcher And Ebos Poised To Have A Banner Year After Strong H1 FY21?

Summary

  • Fletcher Building and EBOS remain insulated from the impacts of COVID-19 pandemic.
  • Report better-than-expected results in the first half of FY21 ending December 31, 2020.
  • Both Groups show earnings and profitability growth due to certain strong initiatives.
  • Expect similar outcomes in the second half of FY21.

Dual-listed Fletcher Building Limited (NZX:FBU) in its better-than-expected performance in the first half of FY21 reported  a jump of 47% in its operating profit, up from  NZ$ 219M to NZ$323M. The Company’s net profit was also up by almost 48% from NZ$82M in HY20 to NZ$121M in the first half of the year.

Fletcher Building, which is the one of the biggest building construction and material manufacturers operating in NZ and Australia, reported such strong results due to its strategy to drive growth.

Strong Revenue Growth

In line with that, all indicators have shown growth. The Company’s revenue rose 1% at NZ$3,987M from NZ$3,961M over the same period last year. Both the cash flow and balance sheet reflect strength, with the Cash flows from operating activities being at NZ$428 M.

Due to the strength of the Group’s performance, an interim dividend of 12 cps has also been announced to be paid on March 24.

Chief Executive, Ross Taylor said that the improved profitability and earnings were due to the initiatives taken by the Company to improve efficiencies and discipline in operations across segments.
Also Read: A Sneak Peek into Fletcher Building (NZX:FBU) performance

In addition, a stable market environment for property businesses and growth in the residential sector in NZ also fueled this growth.

Outlook for 2HY of FY21

The Group expects the residential demand to remain strong in NZ and the volumes growth to be at the same level in the second half of FY2021.

It expects the group operating profits to be in the range of NZ$610M to NZ$660M for the entire FY21.

On February 17, 2021, the stock was trading up by 0.78% at NZ$ 6.500, at the time of writing this article.

EBOS Group Limited

Dual-listed EBOS Group (NZX: EBO) is the largest and the most diversified wholesale distributor and marketer of healthcare, pharma products. It is also the leading animal healthcare brand across Australia and NZ.

Strong Growth in animal care segment

The Group witnessed a 6.3% growth in revenue at NZ$4.7 billion in the half year of FY21 ending December 31, 2020. Its net profit was NZ$94.3M (up 14.2%). The Group reported very strong performances in both healthcare and animal care segments with the operating profits for the first category being 11.2% and 25.6%, respectively. The Group also reported a strong cash flow situation rising by 33% at NZ$98.7M.

The much higher growth numbers for the animal care segment on the account of acquisition of CH2’s vet distribution business was approximately NZ$9M. This strengthened Australian veterinary wholesale distributor, Lyppard’s Pty Limited’s, market position in this sector.

The second acquisition by the Group of Cryomed Aesthetics gave a boost to its medical devices business. Cryomed Aesthetics distributes devices and consumables used in the aesthetic procedures in Australia and New Zealand. It may be noted that NZ$60M worth of business comes from the sale of medical devices on an annualised basis.

On the back of strong performance, the Group announced an interim dividend of NZ42.5 cps, up 13.3% from previous year.

Read Also: Would these NZX50 listed Healthcare stocks -RYM, FPH, EBO Keep On Truckin’ in 2021?

Outlook
For the future, EBOS stated the Group would monitor the COVID-19 impacts, and that, so far there had been no negative impact on the financials. Given the Group’s position in the market and scale, it is expected to do well in the next half of FY21.

On February 17, 2021, the stock was trading up 1.27% at NZ$ 29.540.


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