Fletcher (NZX:FBU): Would the Company perform well in upcoming results?

Highlights

• Fletcher Building delivered a solid set of financial results in FY21.
• The Group expects that strong vaccination rates in AU and NZ will help the business from COVID-19-induced disruptions.
• The Group has a target of an EBIT margin of 10% by FY23.

Fletcher Building Limited (NZX:FBU; ASX:FBU) is involved in the manufacturing of building products. The Group delivered strong revenue of $8.1 billion and net earnings of $305 million in FY21.

FBU benefitted from a strong residential market in NZ, but its operations were impacted in Australia due to a slower commercial and civil market.

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The Board paid a total dividend of 30cps for the period. Moreover, the Group’s balance sheet resilience allowed FBU to support the share buyback, inventory rebuild and maintain a solid balance sheet.

Fletcher’s FY22 performance amid COVID-19

FBU had to shut down almost all its businesses across NZ for 2 weeks and for 5 weeks in the Auckland region through August and September.

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However, the Group expects that trading conditions will be better than last year for NZ if lockdown levels are not very strict in the country.

Fletcher is primarily focused on the East Coast in Australia, and lockdowns in some form or other have been a hallmark of the FY22 year so far. This has resulted in subdued trading levels across the Company’s businesses. However, trading levels are likely to get better as both NSW and Victoria open with growing vaccination levels.

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FBU’s teams in Australia and NZ have kept Fletcher’s business running effectively by adapting to demands and difficulties of different approaches taken by each state and government in 2021.

Road ahead

Fletcher remains optimistic about the present momentum and future performance. However, it is still navigating difficulties arising from the COVID-19 pandemic. FBU believes that increased partnership with the Government can bring benefits to the economy and society as living with the COVID-19 pandemic has become a new normal.

The Group has a target of an EBIT margin of 10% by FY23.

FBU expects the following factors will help in delivering long-term value for shareholders.

• Increased vaccination rates across both sides of Tasman will help in unlocking more freedom.
• Support a rational and risk-based approach from the Government while removing border curbs and opening up the economy.
• More certainty and speed of decision making from the NZ Government for workplace safety.

FBU ended the day 0.83% in red to close at $7.19.

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