FLETCHER BUILDING YEAR END ALL ABOUT "SIGNIFICANT ITEMS"

By NZHJ August 17, 2017 Industry news

"Significant items" mean Fletcher Building year end operating earnings are negative 80%.

Fletcher Building yesterday revealed its result for the 12 months ended 30 June 2017.

Although the overall top line was up, with revenue of $9.4 billion (+4%), its bottom line suffered substantially.

Net Earnings before significant items were not great at negative 23% on the prior year, but the fall in Reported Operating Earnings was far more significant, negative 80% in fact.

In the same vein, Reported Operating Earnings for the various divisions paints a more realistic picture than the numbers for net earnings before significant items:

Gross Revenue ($m)

2015

2016

2017

Change

Building Products

2,656

2,449

2,270

–7%

International

2,007

2,128

2,017

–5%

Distribution

3,081

3,184

3,112

+3%

Residential & Land Development

238

343

420

+22%

Construction

1,342

1,648

2,246

+36%

 

 

 

 

 

Operating Earnings* ($m)

2015

2016

2017

Change

Building Products

184

353

169

–52%

International

143

103

169

+64%

Distribution

93

175

40

–77%

Residential & Land Development

66

84

130

+55%

Construction

54

78

–204

–126%

(*Operating Earnings after significant items.)

 

 

 

 

As the company confirmed in its NZX statement: "Performance was impacted by the Building + Interiors (B+I) business unit within the Construction division, which reported a $292 million loss during the year.

However, with a new team now leading this business unit, B+I will become "a more focussed business, targeting key sectors and clients and incorporating appropriate risk premiums into margins."

An impairment charge of $222 million for the Tradelink and Iplex Australia businesses also made an impact.

These businesses, although "progressing well", are still in the process of being turned around.

Still, the Tradelink impairment ($153m) did stymie the good progress of the Distribution division, which otherwise fared well enough.

PlaceMakers showed gross revenue of $1.2 billion (+6% on last year), "reflecting growth in core categories such as timber, frame & truss, and insulation, as well as in targetedcategories such as fastenings, doors and windows."

Gross revenue at Mico was also positive at $250 million (+6%), with "market share gains in both the bathroom segment and plumbing supplies".

Steel Distribution on both sides of the Tasman also showed double digit gains to its bottom line.

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