The Fletcher Building Limited (ASX: FBU) share price is on the move on Wednesday.
At the time of writing, the building products company's shares are up 4.5% to a 52-week high of $7.02.
Why is the Fletcher Building share price rising?
Investors have been buying the company's shares this morning after it provided an update on its guidance for FY 2021 and revealed plans to return funds to shareholders.
According to the release, Fletcher Building is expecting to achieve earnings before interest and tax (EBIT) of NZ$650 million to NZ$665 million in FY 2021. This is at the top end of its previous guidance range.
CEO Ross Taylor commented: "We continue to make material progress on executing our strategy and achieving key financial targets. We are seeing a broadly stable market environment with trading conditions in the second half of FY21 largely consistent with the first."
"Despite some supply chain constraints and input cost pressures, we continue to see good margin performance from the business. Forward indicators for market activity are pointing to ongoing robust volumes in New Zealand and Australia, with our businesses focused on delivering above market growth and improved profitability in this environment."
Share buyback
In light of its positive form and its strong balance sheet, Fletcher Building has announced that it will undertake a capital return to shareholders of up to NZ$300 million. This will be achieved through an on-market share buyback, commencing in June.
Mr Taylor commented: "Fletcher Building's balance sheet is in a strong position, with leverage expected to remain below our target range in the medium term. This position provides us with capacity to recommence capital management and distribute up to NZ$300 million to shareholders, with the most effective method being an on-market share buyback."
