Fletcher Building Returns to Profitability, but End-Market Weakness Will Drive Near-Term Challenges
No-moat Fletcher Building’s first-half results were slightly below our expectations, with profitability pressure from weaker Australian markets, heightened competition, and input cost inflation. While we’re encouraged operating profits returned to positive levels versus a loss in the previous corresponding period, or pcp, the firm’s EBIT margin of 6% trails our full-year 7% forecast. Nonetheless, management’s updated outlook for the year for EBIT in a range of NZD 650 million to NZD 700 million ...Fletcher Building is a holding company. Through its subsidiaries, Co. operates in six divisions: Heavy Building Products, which manufactures, distributes and markets heavy construction material; Light Building Products, which manufactures a range of building products for residential and commercial markets; Laminates and Panels, which manufactures and distributes decorative surface laminates; Distribution New Zealand and Distribution Australia, which consist of building, plumbing, pipeline and steel distribution businesses in Australia and New Zealand; and Construction, which is a general contractor in New Zealand and the South Pacific and a builder of residential homes in New Zealand.
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