Fletcher Building has posted a total net loss of $11 million for the six months to December 31, a sharp improvement on the $134m loss recorded in the same period last year, as the group continues to restructure through a subdued building cycle.
The result comes amid weak residential and civil construction markets in both New Zealand and Australia, although the company says underlying performance across its core manufacturing businesses remained stable.
Revenue from continuing operations was $2.8 billion, broadly in line with the prior corresponding period. Earnings before interest and tax (EBIT) before significant items were $145m, delivering a margin of 5.1%, consistent with last year.
Managing director and chief executive Andrew Reding says the group had made progress despite difficult conditions.
“The first half of FY26 was another demanding period for the building industry, with subdued markets across New Zealand and Australia,” Reding says.
“Conditions differed between a particularly weak first quarter and a more stable second quarter. In that environment, our core manufacturing businesses held up well, supported by disciplined cost control and better operational execution.
“Just as importantly, we continued to make real progress on our strategy around simplifying the Group, strengthening the balance sheet, and embedding a decentralised operating model that improves accountability and performance.”
Construction sale reset
A major step in that strategy was the announced divestment of the construction division on January 20.
The headline sale price is $315.6m, with the potential to rise to $334.1m depending on the final outcome of certain contracts. Net cash proceeds are estimated at $300m–$315m after transaction adjustments and costs, and will be used to reduce debt. The deal is expected to complete in the first quarter of FY27, subject to regulatory and customer approvals.
Reding says the transaction marks a turning point.
“The sale of construction is a major step in reshaping Fletcher Building into a simpler, more focused building products manufacturing and distribution group. Combined with the cost and capital discipline we have put in place, it positions the Group well to benefit as market conditions recover.”
The sale will also significantly reduce lease liabilities, with further reductions expected once the transaction completes.
Net cash from operating activities rose to $156m, up from $87m a year earlier, reflecting tighter working capital management and cost reductions.
Net debt at December 31 stood at $1.164 billion, below internal expectations. Available liquidity was approximately $800m, including a new $200m bank facility and extensions to key syndicated facilities.
Return on invested capital before significant items was 4.3%, down slightly from 4.6% in the prior period.
No interim dividend has been declared.
Volumes mixed across division
Trading conditions remained competitive, particularly in distribution, where margin pressure persists.
In New Zealand:
- Winstone Wallboards volumes were largely flat, although daily sales have shown modest improvement since the third quarter of FY25.
- Winstone Aggregates volumes fell 13.2% due to weakness in roading and project delays.
- Golden Bay volumes were flat year-on-year, with gains from new projects offsetting softer demand elsewhere.
- PlaceMakers F&T recorded improving volumes, with a noticeable lift in December.
- Humes volumes declined 12.8% amid weak civil and subdivision activity.
Heavy building material volumes ranged from flat to down 12%, while light building products and distribution volumes were flat to modestly positive.
Outlook cautious
Reding says a meaningful recovery is still some way off.
“In New Zealand, residential and civil demand is likely to remain relatively subdued through FY26, with a more meaningful recovery not anticipated until calendar year 2027. In Australia, early signs of stabilisation are emerging in parts of the portfolio, although conditions remain uneven.”
Fletcher says the benefits of cost reductions, portfolio simplification and capital discipline are expected to progressively support performance as conditions improve.
