Fletcher Building Limited

FBU Details

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

Financial Results for FY 2023

• FBU posted revenues of $8,469 Mn as compared to $8,498 Mn in FY 2022, while EBIT before significant items stood at $798 Mn, reflecting a rise of 6% from $756 Mn in FY 2022.
• The company’s net profit after tax stood at $235 Mn (including significant items of $301 Mn) as compared to $432 Mn in FY 2022 and its cash flows from operations stood at $388 Mn as compared to $592 Mn in FY 2022
• Its net profit after tax was impacted by the significant items charges of $301 Mn.

Outlook

The company’s current expectation is that net profit after tax (on a standalone basis) in FY 2023 would be above $30 Mn. This guidance includes the impact of an estimated $3.5 Mn in Apollo-related transaction costs in FY 2023.

Recent Update

FBU issued the detailed update on the cause of the plumbing failures which occurred in numerous homes built in Perth between 2017 – 2022, along with the activities Iplex Australia is undertaking to support industry as well as homeowners in finding the right solution.

FBU reaffirmed that evidence to date clearly points to the installation as the cause of the plumbing failures and no evidence is suggesting that manufacturing is at fault. The data as well as information provided by product merchants, builders and plumbing contractors confirms that the plumbing failures are limited to Western Australia and no abnormal leak rates occurred elsewhere in Australia, contrary to the claims which were made by BGC.

On 17^th April 2023, Iplex Australia committed AUD$15 Mn to an interim support fund in order to establish causation and inform appropriate fixes for the homeowners and support Perth builders and plumbers to complete repairs (leaks and resulting property damage) as well as ceiling pipe replacement in the homes.

Stock Information

On 17^th October 2023, the stock price of FBU stood at NZD 4.380 per share, up by 1.15% as on 17^th October 2023.

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 October 17, 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.

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