Fletcher Constructing an Upbeat Narrative

NZ building products giant Fletcher Building (FBU) saw its ASX-listed shares jump more than 6% at one stage on Wednesday when it revealed a rare earnings guidance for the 2022-23 financial year.

The shares ended the day at $A4.54, up 2.25% after topping out at $4.74 (up more than 6.5%). That still leaves the shares down more than 30% year to date.

Apart from some wishy-washy statements about the outlook, no major ASX-listed company has been as definite about the next financial year – let alone the financial year about to close on June 30 – because of the surge in inflation, costs (especially energy) and rising labour shortages (and costs).

In an investor day presentation released before trading, FBU was upbeat, forecasting it would meet this year’s guidance of around $NZ750 million, and more for 2022-23.

“Included in the presentation is guidance confirming our FY22 EBIT (before significant items) which is expected to be c.$750 million. In addition, FY22 second half EBIT margin (before significant items) is expected to be c.9.5%,” FBU told the ASX.

Fletcher Building CEO Ross Taylor said: “We are pleased to be able to highlight where we are taking the company over the next few years as we continue to drive operational improvements and growth.

“We have been actively investing both capital and overheads with a focus on delivering some exciting future growth opportunities in FY23 and beyond.”

Besides meeting guidance for the June 30, 2022 year, FBU expected a $NZ100 plus lift on that in 2023, despite seeing a “broadly flat market”.

FBU is expecting margins to weaken in residential development, a lower result from its industrial development business and higher costs at head office to account for a major digital move.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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