The Fletcher Building Ltd (ASX: FBU) share price could be under pressure after the company reported ongoing declines in trading volumes for the first quarter of FY26, with weak demand and strong competition weighing on its results.
What did Fletcher Building report?
- Light Building Products volumes mostly lower than last year, but Comfortech (+3.8% pcp) and Iplex NZ (+14.1% pcp) showed growth
- Heavy Building Materials saw further contraction, with Winstone Aggregates down 6.3% from the prior corresponding period
- Distribution (PlaceMakers Frame & Truss) volumes were steady, but margins tightened in competitive conditions
- The Residential division delivered 88 units to profit, a slight fall from 90 a year ago
- Margins across divisions remain under pressure, but cost control and production efficiencies provided some support
What else do investors need to know?
Fletcher Building has launched a new cost-out and efficiency programme, targeting around NZ$100 million in annualised savings. The company expects about NZ$50 million of these benefits to flow through during the second half of FY26, with the full run-rate to be achieved in FY27. These savings focus mainly on back-office improvements, aiming to protect front-line operations.
Despite subdued trading, management is staying disciplined on cash preservation and maintaining a strong balance sheet. The company notes that market conditions are especially tough in New Zealand, with 11-year high residential inventories and continued softness in key sectors. However, recent interest rate cuts may help steady conditions in the housing market.
What did Fletcher Building management say?
Andrew Reding, Managing Director and Chief Executive Officer, said:
The quarterly volumes show that there were further declines in trading volumes and ongoing pressure on margins amid subdued market conditions during the first quarter. The principal drivers for the softer performance were continued weak demand across key markets and heightened competitive activity, particularly in the New Zealand market.
What's next for Fletcher Building?
Looking ahead, Fletcher Building expects market conditions to remain challenging through the rest of FY26, with ongoing uncertainty in the timing of a residential recovery. Management is committed to cash preservation and cost control, working to position the company for stronger performance when market demand improves. Recent OCR reductions could help the New Zealand housing market regain momentum, while there are early signs of stabilisation in Australia.
Fletcher Building share price snapshot
Fletcher Building shares have increased 3% for the year to date, underperforming the S&P/ASX 200 Index (ASX: XJO) which has risen 9% over the same period.
