What are Fletcher’s (NZX:FBU) strategies ahead?

Highlights

  • Fletcher Building delivered a strong FY21, showing minimal impacts from COVID-19.
  • The Group reported an NPAT of $305 million for FY21 compared to a loss of $196 million in the prior year.
  • Fletcher continues to make targeted investments that includes key maintenance and growth investments as well as plans on sustainability.

Fletcher Building Limited (NZX:FBUASX:FBU) builds homes, buildings, and infrastructure across New Zealand, Australia, and the South Pacific. It runs through 6 divisions – Building Products, Distribution, Concrete, Residential and Development, Construction, and Australia.

Fletcher posted a strong financial performance and continuing operational improvements in FY21. The Group witnessed the minimal effect of COVID-19 and instead saw a more normal trading environment during the operating period.

Image source: © 2021 Kalkine Media New Zealand Ltd, Data source- Company Announcement

FBU reported an NPAT of $305 million in FY21, up from the loss of $196 million in FY20 and an EBIT of $669 million, which was ahead of its FY21 guidance. Cash flows from operating activities stayed robust at $889 million, partly gaining from low stock levels in the manufacturing and housing businesses, which is expected to renovate through FY22.

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FBU’s board declared a final dividend of 18cps for FY21, due to be paid on 17 September 2021.  This would take the total dividend to 30cps for the year.

Fletcher’s strategy

Fletcher’s overall strategy considers many factors that include environmental, social, and governance. The Group has 5 strategic goals that have a focus on achieving performance and growth and are mentioned as follows:

  • Zero injuries every day.
  • Investing in initiatives that create real customer value and stopping those that don’t.
  • Market-leading customer solutions and services.
  • Economic performance of each business in the industry’s top quartile.
  • Leadership in innovation, sustainability, and growth via disruption.

The Group is making targeted investments to deliver on its strategy. It includes a combination of capital and operating expenditure and a focus on 3 areas. One is key maintenance investments like the new Winstone Wallboards plasterboard facility.

The second is an initiative that supports carbon reduction as it forms one important element of the Group’s broader sustainability strategy. The third is growth investments in product adjacencies and digital capabilities.

On 9 September, at the time of writing, FBU was trading at $7.48, up 0.13%.

Road Ahead

Fletcher remains well placed to deliver future performance and growth as it has a clear approach, a positive market attitude, and a strong balance sheet. The Group expects that its key markets will stay encouraged to more growth.

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The activity channel continues to look stronger for the residential sector in NZ. Current supply chain and labor controls have had a leveling effect on the latest sharp increases in building approvals over a longer period. This would imply a prolonged period of solid building activity across FY22 and beyond.

Australia’s residential outlook also remains resilient, mainly across detached housing and renovations.

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

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