The Fletcher Building Limited (ASX: FBU) share price will be in focus on Wednesday following the release of its half year results.
In early trade in New Zealand, the company’s NZX-listed shares are up 3%.
How did Fletcher Building perform in the first half?
For the six months ended 31 December, Fletcher Building reported a 1% increase in revenue over the prior corresponding period to NZ$3,987 million.
Positively, things were much better for the building products company’s earnings.
It reported earnings before interest and tax (EBIT) growth of 47% to NZ$323 million. And on the bottom line, Fletcher Building reported a 48% jump in net profit after tax to NZ$121 million.
Management advised that this improvement in its profitability was the result of initiatives undertaken to improve operating disciplines and efficiencies.
The company’s operating cash flows were also strong and came in at NZ$428 million. This allowed the Fletcher Building board to declare an interim dividend of 12 NZ cents per share.
Management commentary
Fletcher Building’s Chief Executive, Ross Taylor, commented: “Our strong HY21 results reflect good progress made on our strategy to drive consistent performance and growth. The improved earnings and profitability are the outcome of initiatives undertaken over the past three years to improve operating disciplines and efficiencies across the Group.”
The Chief Executive revealed that trading conditions have been mixed but stable.
He explained: “We have seen 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.”
“In all businesses, we have remained focused on executing our strategy, especially improving the underlying disciplines and efficiencies of our operations. 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,” he added.
Outlook
Management appears confident there will be more of the same in the second half.
Mr Taylor said: “Current indicators point to core volumes in NZ and Australia remaining at present levels through the second half, with robust demand for Residential housing in NZ. This market outlook assumes no material impact from COVID-19.”
It has provided FY 2021 EBIT before significant items guidance of NZ$610 million to NZ$660 million. This compares very favourably to EBIT before significant items of NZ$160 million in FY 2020.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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