Fletcher Building, one of Australasia’s biggest construction and building products groups, has confirmed a solid turnaround in the year to June.
The company told the NZX and the ASX on Wednesday that it earned a $NZ305 million in 2020-21, a huge turnaround from the impairment hit loss of $NZ196 million.
The general rebound in the NZ economy and a surge in demand for building products on both sides of the Tasman helped drive the recovery, along with cost cutting, staff sackings and other measures to resize the company to take account of the damage wrought by Covid, especially in its Australian markets.
Shareholders will benefit after not receiving any payments in 2020.
The company will pay a final dividend of 18 NZ cents a share, taking the full-year payout to 30c.
It last paid a 23-cents per share dividend in 2019.
The latest profit includes write-downs of $NZ128 million, with $NZ47 million related to the final phase of an Australian restructuring programme, and $NZ81 million due to a writedown of its Australian Rocla concrete business which it sold after the end of its financial year.
The increased demand from construction both sides of the Tasman is putting pressure on the availability of building materials and labour, which are already in short supply due to disruptions caused by the Covid-19 pandemic.
That in turn is leading to rising costs for products and labour shortages.
“As we look ahead, we believe that the economic trends in our key markets remain supportive for further growth,” CEO Ross Taylor said in the statement.
Supply chain and labour constraints mean the residential sector is currently at or near capacity, which is likely to mean an extended period of building activity beyond the company’s 2022 financial year, he said.
“In New Zealand, the activity pipeline continues to look ‘stronger for longer,’ especially in the residential sector,” Taylor said.
“With ongoing supply chain and labour constraints having the effect of smoothing the recent sharp rises in building consents over a longer period, this is likely to mean an extended period of solid building activity.”
Fletcher posted an operating profit of $NZ669 million which was just ahead of its forecast for $NZ650 million to $NZ665 million.
Revenue rose jumped to $NZ8.12 billion from $NZ7.3 billion in 2019-20.
Fletcher’s building products unit more than doubled pre-tax earnings to $NZ197 million from $NZ87 million in 2020 and $NZ167 million in 2019.
Building products revenue rose 19% to $NZ1.4 billion amid strong demand from residential and infrastructure building sectors.
The future outlook now looks less confident with the lockdowns in NSW and Melbourne prolonged and almost certainly slowing activity in the building and construction sectors.
