Highlights

  • Q1 FY26 trading volumes of FBU fell due to decrease in demand and competitive pressures.
  • Light Building Products showed mixed performance; Heavy Materials experienced contractions.
  • Residential units slightly declined, with cost-out initiatives underway for efficiency.

Fletcher Building Ltd (NZX:FBU) is a New Zealand-based construction and building materials company, operating across residential, commercial, and infrastructure sectors in New Zealand, Australia, and the Pacific. The company released its quarterly volume report for Q1 FY26 on 13 October 2025, providing shareholders with updated product sales volumes.

Andrew Reding, Managing Director and Chief Executive Officer, said: “The quarterly volumes show that there were further declines in trading volumes and ongoing pressure on margins amid subdued market conditions during the first quarter. The principal drivers for the softer performance were continued weak demand across key markets and heightened competitive activity, particularly in the New Zealand market.”

“This has resulted in a further tough quarter for the business. The market remains highly competitive, as demand stays low, particularly across the residential and infrastructure sectors.”

Divisional Performance

Light Building Products
Volumes were generally below the prior corresponding period (pcp) but slightly higher than Q4 FY25. Positive growth was observed in Comfortech (3.8% pcp) and Iplex NZ (14.1% pcp). In Australia, despite lower volumes compared to pcp, Laminex AU and Iplex AU performed better than in Q4 FY25. Margins remained relatively stable, aided by production efficiencies and cost management.

Heavy Building Materials
The division experienced notable volume contractions. Winstone Aggregates volumes declined 4.1% versus Q4 FY25 and 6.3% versus pcp due to weaker roading and project activity. Firth and Golden Bay volumes were broadly in line with last year. Steel volumes rose slightly versus Q4 FY25 and pcp, though margins compressed further.

Distribution Division
PlaceMakers Frame & Truss volumes were flat to slightly higher on pcp, while margins fell under competitive trading conditions.

Residential
The division delivered 88 residential and apartment units in Q1 FY26, compared to 90 units in Q1 FY25. Overheads were tightly managed to mitigate the effect of low sales volumes and elevated inventories, currently at an 11-year high. The division anticipates potential sentiment improvement following recent OCR adjustments.

Cost-Out and Efficiency Programme

Reding added: “Given the continued deterioration in market conditions, we continue to carefully examine our cost base with a further cost-out programme targeting c. NZD100m in annualised savings. Approximately NZD50m in benefits are expected to be realised in the second half of FY26, with full annualised savings to be achieved in FY27.”

“This cost-out programme is focused primarily on back-office operations and efficiencies, while seeking to maintain front-line operational capabilities, and will partially offset the earnings impact of market conditions.”

Market Outlook

Fletcher Building expects challenging market conditions to persist for the remainder of FY26, with uncertainty around residential sector recovery. Recent OCR reductions may support liquidity in the New Zealand housing market, and some stabilization is noted in Australia. Management continues to focus on cash preservation, cost discipline, and maintaining balance sheet.