Fletcher Building (FBU) says it’s back in profit and paying dividends after the first of its five-year turnaround strategy.
The annual net profit after tax of $NZ64 million compares with the $188 million in 2017-18.
The profit was achieved on a 1% rise in revenue to $NZ9.3 billion for the year to June.
FBU has reinstated dividend payments this year with a total dividend for the year of 23 NZ cents a share.
CEO Ross Taylor said in the release the company was looking at a small improvement in earnings in the 2019-20 year.
He said the forecasts for the 2020 year were for earnings before interest, tax and significant items (EBIT) of $NZ620 million to $650 million, compared with $631 million this year ($NZ50 million in 2017-18).
Taylor also confirmed the recently proposed return of $NZ300 million to shareholders by way of a share buyback will begin from Thursday.
Taylor said in the release: “FY19 was an important transition year for the Company and we made significant progress on our five-year strategy. Fletcher Building delivered a solid financial performance for the year, and I am pleased with the work we carried out to stabilise and refocus the Company.”
“In New Zealand our core building products and distributions businesses delivered good results, maintaining strong market positions and revenues despite operating in a highly competitive environment.
The Construction division stabilised which led to a return to profitability, and we are on track to complete the remaining legacy B+I projects within the provisions we set in February 2018.
In Australia, the performance reflected tough market conditions, rising input costs and poor operating disciplines in some areas. Turnaround plans are well underway to reset these businesses and deliver growth in FY20.
The Company’s decision to operate in a more focused geographic footprint in Australia and NZ led to the sale of international businesses Roof Tile Group and Formica during the year.
The sale of Formica for $NZ1.2 billion materially strengthened the Company’s balance sheet, we have commenced our NZ$700-800 million debt reduction and will distribute up to NZ$300 million to shareholders through an on-market share buyback.
“It was a year of solid execution against the Company’s strategy. We have landed a leaner organisation and end the year with a more manageable footprint and a strong balance sheet. Looking ahead, we will drive performance across the business in FY20,” Taylor said.
The market thinks FBU is back on track and pushed the shares up 2% to $A4.46 in a wider market down 1%.
