Fletcher Building Ltd (ASX: FBU) shares be suspended until later today to give the building products company time to explain its bombshell announcement to analysts and investors. The ASX 200 stock's suspension request states:
[Fletcher Building] considers it appropriate for additional time to be provided following the conclusion of the investor call, to enable investors and the market to consider and assess the information released by FBU and the commentary provided at the investor call.
Image source: Getty Images
What's going on with this ASX 200 stock?
This morning Fletcher Building released its half-year results which were significantly weaker than the market was expecting. It also announced the impending exit of its CEO, Ross Taylor.
In respect to its results, the ASX 200 stock reported:
- Revenue down 1% to NZ$4,248 million,
- EBIT before significant items down 27% to NZ$264 million,
- Net loss after tax of NZ$120 million
- Dividend suspended
What happened?
Fletcher Building's outgoing chief executive, Ross Taylor, revealed that its performance was impacted largely by challenging trading conditions in New Zealand. He said:
Against the backdrop of materially weaker trading conditions, particularly in the NZ residential sector where volumes declined 20%, Group revenue of NZ$4,248 million was in line with the prior period's NZ$4,284 million. EBIT before significant items was NZ$264 million, compared to NZ$360 million in the prior period.
Taylor also advised that significant items weighed on its profits. He adds:
The Group reported a net loss after tax of NZ$120 million, compared to a profit of NZ$92 million in the prior period. Disappointingly, the result was heavily impacted by the NZ$165 million significant items provision on the New Zealand International Convention Centre announced on 5 February and a $122 million non-cash impairment and writedown on the Tradelink Australia business.
Management is now looking to divest the Australian Tradelink business after deciding that "further ownership of the business is not in line with the strategic objectives of Fletcher Building."
CEO and chair to exit
In a separate announcement, the ASX 200 stock advised that Ross Taylor will be leaving the company along with its chair, Bruce Hassall.
Hassall commented:
The Board, Ross and I believe it is in the best interests of the business and the team that he handover to a new leader and that I hand over to a new Chair at the time of the ASM in October.
Mr Taylor has a six-month notice period, which he will serve in full if required to facilitate an orderly handover to his successor.
Fletcher Building shares are down 19% over the last 12 months.
