FBU announces expected HY23 Results, FY23 guidance

Fletcher Building Limited, Private Bag 92114, Auckland 1142, 810 Great South Road, Penrose, Auckland 1061, New Zealand

Fletcher Building announces expected HY23 Results, updates FY23
earnings guidance

Auckland, 13 February 2023: Fletcher Building today announced its expected results for the first
half of FY23, which will be released on 15 February 2023, and updated earnings guidance for the
full-year FY23. The half-year result remains subject to final approval by the Board and will be
announced in full on Wednesday 15 February.

• Revenue of $4,284 million, up 5% from $4,064 million in HY22
• EBIT before significant items of $360 million, up 8% from $332 million in HY22
• EBIT margin of 8.4%, up from 8.2% in HY22
• Net Profit After Tax of $92 million (including $150 million flagged construction provisions),
46% lower than $171 million in HY22
• Cash outflows driven largely by flagged land and housing stock rebuild following drawdown
in FY21-22 partly offset by good trading cash flows from materials and distribution divisions
• FY23 EBIT before significant items forecast to be $800 million to $855 million as a result of
adverse weather impacts in New Zealand in January and February
• The Board expects to declare an interim dividend, which will be announced on 15 February
2023

Fletcher Building chief executive Ross Taylor said: “Our half year performance reflects the
momentum we have achieved from executing our strategy, focusing on our customers and
delivering sustainable growth, all against the backdrop of a dynamic operating climate.

“Group revenue was solid overall at $4,284 million, up 5% on the first half of FY22. Group Earnings
Before Interest and Taxes (EBIT) before significant items was $360 million, up 8% from $332
million in the prior period. Group EBIT margin, excluding significant items, improved to 8.4% from
8.2%, and Net Earnings attributable to shareholders was $92 million (including $150 million
flagged construction provisions) compared to $171 million in the prior period.

“Cash flows from operating activities for the Group were an outflow of $203 million, compared to
an inflow of $157 million in HY22. This was driven largely by the expected rebuild of land and
housing stock following a significant drawdown in FY21 and FY22. Return on Funds Employed
was 17.8% (compared to 18.7% in HY22), remaining ahead of our 15% target.

“Performance across our materials and distribution divisions led the Group’s revenue, EBIT and
margin improvements in HY23. Sales volumes on both sides of the Tasman were generally in line
with, or slightly below, the second half of FY22, and there was an easing of previous supply chain
and COVID-19 related challenges. Input cost inflation remained elevated, however strong pricing
disciplines led to good recovery of these cost increases. Combined with efficiency initiatives and
a focus on margin accretive market segments, this resulted in the materials and distribution
divisions improving EBIT by $83 million to $339 million while the EBIT margin improved 150 basis

Fletcher Building Limited, Private Bag 92114, Auckland 1142, 810 Great South Road, Penrose, Auckland 1061, New Zealand
points to 8.9%. Pleasingly, our Australian division delivered an improved EBIT margin in the half-
year of 5.3%.

“The uplift in earnings in our materials and distribution divisions was partly offset by lower
earnings in the Residential and Development division, which delivered EBIT of $49 million
compared to $112 million in the prior period. This was due to lower New Zealand housing sales
following two years of strong growth, as well as Industrial Development earnings returning to the
usual run-rate with $16 million EBIT in HY23 compared to $47 million EBIT in HY22. The
Construction division returned to first half EBIT profitability, albeit was impacted by an additional
provision on the New Zealand International Convention Centre (NZICC), announced in
December.

“While the underlying performance of the business is strong, trading in New Zealand in January-
February has been heavily impacted by the adverse weather events. As such, we are now
forecasting FY23 EBIT before significant items in the range of $800 million to $855 million, with
market activity and house sales in the remainder of the year expected to be the key driver of our
result.

“We expect the softening of residential markets to continue into FY24 in both New Zealand and
Australia. This lower activity is likely to reduce volumes in our materials and distribution
businesses by circa 10% to 15% compared to what we have seen in the first half of the current
year. And it is likely to mean that house sales in our NZ Residential development business are at
similar levels in FY24 to what we expect to deliver this year. Commercial and infrastructure
markets are expected to be more robust. As we look ahead to FY24, we are actively managing
variable costs, overheads and capital to ensure we hold margins close to the current FY23 levels
and keep our balance sheet and cashflows healthy.

“With a well-capitalised balance sheet, we are well-advanced on our programme of circa $700
million of growth investments over FY23 to FY26. This will contribute circa $25 million EBIT in
FY24 and full run-rate earnings by FY27 as further investments mature. These projects are
primarily organic and are in logical adjacencies in our New Zealand businesses, including
investments in: wood panels, structural timber, insulation, steel, frame and truss, and concrete
circular solutions. These strategic investments are based on mid-cycle activity levels and are
targeting ROFEs at or above 15%.

“Finally, I want to acknowledge the great efforts of all our Fletcher Building people, particularly
those who sprang into to action following recent and ongoing significant weather events in the
North Island of New Zealand. Our teams quickly mobilised and did an outstanding job repairing
vital infrastructure and securing our sites, in very challenging conditions. Through their efforts,
they have made a real difference for our customers, people and communities who have been
impacted by the flooding.”

Fletcher Building Limited, Private Bag 92114, Auckland 1142, 810 Great South Road, Penrose, Auckland 1061, New Zealand
Authorised by:
Chris Reid
Company Secretary

For further information please contact:

MEDIA
Christian May
General Manager – Group Corporate Affairs
+64 21 305 398
Christian.May@fbu.com

INVESTORS AND ANALYSTS
Aleida White
Head of Investor Relations
+64 21 155 8837
Aleida.White@fbu.com