Fletcher Building Limited

Fletcher Building Limited (NZX: FBU) is the leading provider of building products as well as solutions, operating some 25 businesses throughout NZ, Australia as well as the South Pacific.

FBU Details

Financial Results

• In H1 FY 2023, performance across the materials as well as distribution divisions led the company’s revenue, EBIT and margin improvements. The company posted revenue of $4,284 Mn in H1 FY 2023 as compared to $4,064 Mn in H1 FY 2022.
• The company’s earnings before interest and taxes (or EBIT) before significant items stood at $360 Mn, reflecting a rise of 8% from $332 Mn in the prior period. FBU’s EBIT margin, excluding significant items, witnessed an improvement to 8.4% from 8.2%.
• Net earnings amounted to $92 Mn as well as includes significant Items of $154 Mn (vs $43 Mn in H1 FY 2022) mainly because of construction provisions.

Outlook

The company is forecasting FY 2023 EBIT of $800 Mn - $855 Mn. Even though underlying performance remains robust, Jan-Feb trading was impacted by the adverse weather events in the upper North Island of NZ.

Recent Update

In the release dated 13^th March 2023, the company notified that it has been served by Australian law firm with the shareholder class action filed in the Supreme Court of Victoria. This claim has been brought by the persons who acquired shares on the New Zealand Main Board as well as on the Australian Stock Exchange between 17 August 2016 and 23 October 2017.  It relates to the company’s disclosures regarding the Building + Interiors business in that period.

As per the release, the company is planning to defend the proceedings.

Key Risks

The company is exposed to the risks related to economic slowdown, fall in the housing demand, etc.

Stock Information

On 20^th March 2023, the stock price of FBU stood at NZD4.240 per share, down by 2.53%.

Technical Overview:

Daily Price Chart

Markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for share price chart is based on March 20, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Disclaimer

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