ASX 200 building stock Fletcher Building Ltd (ASX: FBU) is seeing red today after the company posted its FY24 results.
At the time of writing, Fletcher Building shares are swapping hands at $3.02 apiece, more than 2% lower on the day.
Meanwhile, the S&P/ASX 200 index (ASX: XJO) is tracking 0.46% lower today.
Let's see what the ASX 200 building stock posted.
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ASX 200 building stock drops on flat FY24 results
The major takeouts from the year include:
- Revenue of $7.68 billion was flat compared to FY23.
- Earnings before interest and tax (EBIT) came to $509 million, down 35% year over year.
- EBIT margin of 6.6%, down from 10.2% last year.
- Net loss of $227 million, down from a net profit of $235 million in FY23.
- Did not declare a final dividend.
What else happened in FY24?
Fletcher Building reported flat revenues of $7.7 billion, but pre-tax earnings were down more than 35% over the year.
This compressed operating margins by 380 basis points to just 6.6% for the year.
Headwinds were particularly notable in its materials and distribution businesses, where market volumes fell sharply by 25% in New Zealand and 15% in Australia.
As a result of the softer operating performance, the board did not declare a dividend for FY24.
The ASX 200 building stock made several efforts to manage costs throughout the year, achieving gross overhead cost reductions of $111 million as a result.
However, this was partially offset by $91 million in "overhead inflation" and $16 million in restructuring costs.
Despite this, trading cash flows were strong in FY24, increasing to $784 million for the period, up from $537 million the year prior.
The ASX 200 building stock produced operating cash flows of $398 million from this, a growth of roughly $10 million from last year.
What did management say?
Fletcher Building acting CEO Nick Traber was pleased with the results amid a challenging economic backdrop. He said:
Against the backdrop of slowing demand, and inflationary and competitive pressures, Fletcher Building's businesses have demonstrated resilience. Despite the challenges, the focus of the business has been on optimising our operational performance and tightly managing the things within our control.
These focus areas include costs, cash, capital expenditure, extending the tenor of our debt facilities and obtaining more favourable terms for covenant testing, selling Tradelink and resolving outstanding legacy issues.
Traber also commented on some of the stronger divisions:
The Residential and Development division has continued to perform well through the cycle, generating strong EBIT margins and ROFEs above 15%.
We think it is the right time to explore capital partnership options for Residential and Development, to invest in and drive the next phase of the business's success. Consequently, we have engaged Jarden to explore options with both local and international investors.
What's next?
Looking ahead, Fletcher Building expects FY25 to remain challenging due to macroeconomic conditions.
The company anticipates market volumes in its materials and distribution businesses to decline by 10% to 15% this coming year.
In response, Fletcher Building will continue to focus on cost management and reducing the company's debt load.
In this environment, we have a continued focus on tightly managing costs and cash flows. We will also focus on protecting our people, delivering on our promise to customers and positioning our businesses well for when our markets return to growth.
ASX 200 building stock snapshot
ASX 200 building stock Fletcher Building is down more than 35% in the past 12 months. It has lagged the broader market by more than 47% in that time.
