Fletcher Building cuts earnings guidance

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File photo. Fletcher Building chief executive Ross Taylor.
Photo: RNZ / Cole Eastham-Farrelly

Fletcher Building has cut its earnings guidance because of a slowing economy and fall-off in house building.

The company is now forecasting full-year earnings before interest, tax and significant items of about $800 million compared with its February forecast of $800m-$855m, with the outcome dependent on market activity and house sales.

Chief executive Ross Taylor told an investor gathering the performance was solid, but the number of houses built – an earnings driver – is below target.

“We have seen market activity soften in the second half, along with the ongoing impact of wet weather. Our house sales in FY23 will be around 650 units, below our previous target but proving some resilience in a slow New Zealand housing market.

“In line with prior guidance, cash flows have been strong in the second half.”

He said the business was expecting further softening in the coming financial year.

“Our current outlook is for market volumes in our materials and distribution businesses to soften by a further about 8 percent, and we are targeting 700-800 house sales.

“Our legacy projects are nearing completion, with some risk still to manage as we close out claims, but our go-forward business is well-positioned with a more focused and lower-risk order book.”

Among the risks and possible claims detailed were around $100m for the just opened Puhoi-Warkworth over Covid-19-related delays; up to $50m relating to the fire-damaged International Convention Centre in Auckland, with a risk of a dispute also with Sky City; and a $40m claim being made by Wellington Airport about a car park project.