A Sneak Peek into Fletcher Building (NZX:FBU) performance

Summary

  • 2020 has been a challenging year for FBU with COVID-19 pandemic presenting some distinctive tests.
  • The Group revenue for 4 months ended 31 October 2020 were 1% higher than pcp amid resilient trading conditions in both New Zealand and Australia, especially in the residential sector.
  • FBU is well positioned with strong balance sheet and good cash flows but COVID-19 long term impact remains uncertain.

FY20 posed as a challenging year for Fletcher Building Limited (NZX:FBU, ASX:FBU) due to COVID-19 impact.

The Group had to deal with 3 areas, which included responding quickly to COVID-19 induced full lockdown in NZ and partial business restrictions in Australia, get the business positioned for the market uncertainty of FY21 and beyond. Thirdly, Fletcher wanted to go swiftly on these activities to stay focused on its overall plan and strategy.

The FBU Board and management worked closely at a rapid tempo to ensure that these impacts were managed well.

Key performance indicators

FBU concluded the year with a strong balance sheet and effectively managed the crisis despite earnings impact of COVID-19. The Group’s operations were significantly impacted by the COVID-19 constraints in FY20, leading to a huge $196 million earnings loss for the Company but it began the new year well.

Source: Shutterstock

Some of the highlights of the financial results for 4 months ended 31 October 2020 included the following:

  • Group revenue rose by 1% compared to pcp supported by resilient trading conditions in both New Zealand and Australia, especially in the residential sector.
  • Group EBIT before significant items stood at $227 million, up by 55% than the comparative period due to 2.9ppts lift in profit margins across the Group.
  • Group net debt stood at $388 million and liquidity stood at $1.4 billion on 31 October 2020.
  • Board paid no dividends for the FY20 amid an uncertain outlook but plans to resume dividend payments in FY21. 

Outlook ahead

FBU’s clients point to volumes staying at current rate through to the beginning of the new calendar year. However, volatility persists in H2 of the financial year, and the effect on its markets in New Zealand and Australia of wider macro-economic conditions stayed blurry.

The Group remains well positioned for the situation ahead, while COVID-19’s long term impacts remain unclear.

As a part of sustainability commitment, the Group aims to lower its carbon emissions by 30% below its FY18 levels by 2030.

ALSO READ: With an eye on clean environment, NZ aims to go green by 2025

On 6 January, at the time of writing, FBU was trading at $5.78, down 0.34%.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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