13 May 2024

Fletcher Building cuts earnings forecast

10:01 am on 13 May 2024
Cranes in Auckland's central city.

Cranes in Auckland's central city. Photo: RNZ / Cole Eastham-Farrelly

The country's biggest building company has cut its earnings forecast as it faces deteriorating market conditions.

Fletcher Building said its full-year underlying earnings would likely be between $500 million and $530m, compared to its previous guidance of $540m to $640m.

The company said it included $10m to $15m of restructuring costs.

Fletcher said the drop in earnings guidance was driven by "challenging conditions" in the distribution division, which was exposed to the weaker residential sector.

It was also facing "intense price competition" and had to cut prices as it fought for market share.

Fletcher said there had also been a "sharp correction" in the Australian residential market, and a notable slowdown in house sales in New Zealand.

It also saw weaker revenues and margin pressure in certain building products businesses, notably Iplex NZ and Steel.

The company said the variability within its guidance range was driven by May and June being two of its busiest trading months.

Fletcher's acting chief executive Nick Traber said it was working to control costs in response to the weaker conditions.

"Fletcher Building has many strongly positioned core business assets that have demonstrated resilience in current market conditions."

"Our immediate priorities are to optimise the performance of each of our businesses, close out legacy issues and tightly manage risks to maximise our ability to deliver shareholder value," he said.

Fletcher said its concrete business showed ongoing resilience, with revenues stable and margins improving in the second half of the financial year.