28 Nov 2019

Fletcher updates profit outlook reflecting a slow start to the year

7:02 pm on 28 November 2019

Tough market conditions, a string of severe incidents, and land protests are keeping the pressure on the country's biggest building firm, Fletcher Building.

The company's annual meeting has been told that some of its divisions have had a slow start to the trading year, although market demand remains strong.

It is forecasting full year underlying profit to be in a range of $515m to $565m, broadly similar to last year's $549m.

Chief executive Ross Taylor said the business, which had been afflicted by massive losses on construction projects and writedown in assets, was being turned around.

"Having achieved our aim through the 2019 financial year of getting the business both focused and stabilised we now have a good foundation for taking Fletcher Building into the future."

Mr Taylor said core local divisions, including building products, concrete and distribution were on track, with the residential and land development division seeing strong demand.

There was some softness in civil, infrastructure and starting trades, less demand for concrete and pipes, and tough competition in the steel market.

It is also restructuring its Australian operations to take account of a slower housing market, which has squeezed its margins.

Fletcher Building has been battered in the past two years by massive losses, suspended dividends, asset sales, and changes in top management.

However, so far this year the company has had several workplace fatalities, the dispute at a planned housing project at Ihumātao in South Auckland, and the fire at the International Convention Centre and Horizon Hotel in Auckland.

Mr Taylor said insurance looked set to cover the costs of the fire, and it was now fully assessing the damage and what delays to completion there would be, with an update due at the half-year result in February.