SOFT DEMAND HURTS BUILDING PRODUCTS' FIRST HALF

By NZHJ February 20, 2020 Industry news

Fletcher Building's Steel businesses impact Building Products' first half numbers.

Overall, Fletcher Building's FY2020 first half (H1) numbers (6 months to 31 December 2019) as released yesterday were largely as expected.

We covered Distribution yesterday (story here), but looking now into the Building Products division, the half was all about "strong volume growth and improved operating performance" from plasterboard (Winstone Wallboards), insulation (Tasman Insulation) and laminates (Laminex).

The company put this down to the NZ residential building sector which "remained supportive for finishing trade work".

In contrast, the Steel businesses saw "challenging trading conditions" and, although operating margins elsewhere in Building Products were on the improve, the division's overall profit fell.

This decrease is being attributed mainly to the Steel businesses, which suffered from "a softening of volumes" from infrastructure (as did the pipe businesses Iplex and Humes) and from residential roofing, along with "sustained pressure on margins".

Overall, Building Products revenues for H1 FY2020 were $645 million (negative 4% on the previous equivalent period), with a reported EBIT of $66 million, 24% down on last year's first half.

Building Products' margins, however, were reported to have improved on the prior period, "driven by price gains and positive operating leverage".

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