Fletcher's 2015-2016 financial year show a big earnings jump over last year.

 

Fletcher Building's annual result for the year to end June 2016 out this morning (see the documents on the NZX here) showed a strong gain in net earnings, despite a drop in Australian revenue.

After last year’s disappointing result overall (see our story here), this year external revenue of just over $9 billion was +4% higher on last year. Some $362 million was from New Zealand revenue (+8%) but partly offset by lower revenue in Australia (–4%).

Net earnings for the year were more impressive at $462 million, a massive +71% increase on 2015. Net earnings before significant items were $418 million, +5% on the 2015 financial year.

To break down the performances of the main divisions, on the whole modest top line performances with one exception (International – Formica, Laminex, Roof Tile Group) turned into decent gains at the bottom line:  

Gross Revenue ($ millions)	2015	2016	Change
Building Products	2,656	2,449	–8%
International	2,007	2,128	+6%
Distribution	3,081	3,184	+3%
Residential & Land Development	238	343	+44%
Construction	1,342	1,648	+23%

EBIT ($ millions)	2015	2016	Change
Building Products	259	274	+6%
International	143	133	–7%
Distribution	148	176	+19%
Residential & Land Development	66	84	+27%
Construction	74	78	+5%

Distribution does double digits again

Turning to the Distribution division which now combines the previously separate New Zealand and Australian Distribution divisions – PlaceMakers, Mico, EasySteel, Pacific Coilcoaters and Fletcher Reinforcing in NZ and Tradelink, Stramit and Tasman Sinkware in Aussie – the latest result reveals another double digit gain in EBIT from a smaller gain in revenue than last year..

NZ Building Supplies achieved gross revenue growth of 10% and reported increased earnings of 13%. 

Within this grouping, PlaceMakers’ gross revenue was $1.2 billion (+10%), with growth in timber, frame & truss and concrete, as well as in “margin accretive” categories like kitchens and power tools.

Also within NZ Building Supplies, Mico’s gross revenue was +12% at $235 million, with strong growth in both bathroom and plumbing.

NZ Steel Distribution reported an EBIT of $44 million (+22%) thanks to strong market share growth from Pacific Coilcoaters, record volumes in Easysteel (now combined with Dimond) and efficiencies from Fletcher Reinforcing and despite steel prices which were at a 15-year low.

The Aussie Distribution businesses reported earnings of $47 million (+27%), of which Tradelink contributed $22 million due to a $14 million gain from property sales.

Having said this, Tradelink also saw a 2% like-for-like decline in revenue to $775 million following its “strategic reset” back to the small trade plumber.

In mitigation, it’s hoped adopting a new Customer Service Promise and customer loyalty scheme, along with 20 new stores in the 2017 financial year, should turn this around.

Operating earnings in Stramit were +43% to $20 million, from a meagre gain in revenue (+1%).