Fletcher Building Limited, undertaking initiatives to improve operating disciplineTeam Veye | 23 Feb 2021 ASX - FBU
Fletcher Building Limited (ASX: FBU)
Fletcher Building limited (ASX: FBU) on 17 February 2021 announced its results for the first half of FY21.
The company witnessed a broadly stable market environment. Growth in the New Zealand residential sector has been offset by softer demand in Commercial and mixed conditions in infrastructure in both New Zealand and Australia. The sustainable improvement in margins was achieved through pricing disciplines; targeted share gains; consolidation and automation of manufacturing and supply chains; and a more efficient overhead cost base.
(Chart source: TradingView)
Growth in the New Zealand residential sector has been offset by softer demand in Commercial and mixed conditions in infrastructure in both New Zealand and Australia
- Group revenue was up by 1% on HY20 to $3,987 million
- EBIT before significant items was up by 47% to $323 million, from $219 million and slightly ahead of the HY21 guidance range of $305 to $320 million
- Group cash flows from operating activities of $428 million were significantly higher than the $5 million outflow in the prior period, resulting from a higher EBIT and a material improvement in working capital.
- Net Profit After Tax was up by 48% to $121 million, from $82 million in HY20
- Group EBIT margins improved to 8.1% from 5.5%, with improvement across all operating divisions
- Declared an interim dividend of 12 cents per share.
- The Group now has $1,812 million in available funding, of which $925 million is undrawn, and $618 million cash on hand.
- The Group’s liquidity is $1.5 billion.
- Net interest expense for the Group was $56 million in the period, of which $33 million was related to lease expenses.
- The Group’s funding costs for the period decreased by 34% to $23 million, resulting principally from lower debt levels following the repayment of $755 million of debt since June 2020
- Capital expenditure of $82 million in HY21 was in line with previously signalled levels and included $31 million for the new Winstone Wallboards facility.
- The Group’s balance sheet and funding profile remains strong
- Overall, market factors – volume, share and price – contributed 15% of the Group’s increased EBIT while around 85% was the result of strategic improvements in operating efficiency.
- Significant items of $86 million in the period comprised $35 million for the final phase of the Group’s restructuring activities being undertaken in FY21, and $51 million for impairment to the carrying value of the Rocla business in Australia, which is currently being divested.
- FY21 EBIT before significant items guidance range $610 million to $660 million (Data Source – Company Reports)
Business performance in the second half of FY21 is expected to be driven by a continuation of the improved operating disciplines and efficiencies delivered in the first half. The Company’s cost-out programme is largely complete, with gross benefits expected to be broadly stable between the first half and second half of the year. Demand for new houses in New Zealand is expected to remain robust. The stock has managed to hold above the middle band of the Bollinger. The strong RSI and MACD support the overall bullish momentum with minor dips. The stock is expected to maintain the upside momentum in the near term. The Latest "Buy" on “Fletcher Building Limited” at the price of $3.50 was given on 22 September 2020. It has already grown by more than 68% in just five months till now. Veye maintains a "Hold" on “Fletcher Building Limited” at the current price of $5.89
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.