Fletcher Building says 'macroeconomic pressures' are expected to persist and economic activity to remain subdued at 'below mid-cycle levels' for the remainder of the financial year

Construction giant Fletcher Building [FBU] has reported a bigger half-year loss of $134 million,  versus $120 million a the same time a year ago.

The company says in its report on NZX that "macroeconomic pressures are expected to persist and economic activity to remain subdued at below mid-cycle levels for the remainder of the financial year". Fletcher again won't pay a dividend, having halted payments last year. The company has raised cash from shareholders in order to pay down debts.

In the past 12 months the embattled construction giant has had a host of replacements of both directors and senior staff, including a new chairman (Peter Crowley) and new chief executive.

CEO Andrew Reding, who is also managing director, said the first half of the 2025 financial year "continued to be a challenging period for our businesses as very difficult trading conditions continued across all our segments".

"This included a broad-based slowing of demand, intense competitive forces and persistent inflationary pressures. Our businesses navigated these obstacles by focusing on optimising operational performance and tightly managing the things within our control. We are pleased with the progress achieved to date on our key priorities which have been: resetting governance and leadership roles of the Group; the ongoing strategic review; the Group-wide cost reduction programme; cash; being prudent with capital expenditure; and progressing the resolution of outstanding legacy issues."

This included a $170 million provision for leaky pipe issues in Western Australia and sale of the Tradelink subsidiary.

Reding said the company was  making progress in "resolving" its remaining construction "legacy projects".

"The New Zealand International Convention Centre project [in Auckland] is now in its final stages, with major construction works substantially completed. Our focus has shifted to finishing, testing, and commissioning, and we remain committed to delivering the project, with handover scheduled by 30 June 2025."

The Residential and Development division reported gross revenue of $240 million, a $111 million and a 32% reduction on the prior period.

EBIT (earnings before interest and tax) for the division was $14 million, compared with $41 million in the prior period. 

Reding said performance in the Residential and Development division "reflected the overall housing market in New Zealand", with 115 fewer units contracted and sold versus the prior period, with average market prices also down approximately 2% on the prior period.

"However, some tentative signs of improvement began to appear post the first OCR cut late in 2024, with sales up 17% between September-December 2024, as compared to July-August 2024.

"Pleasingly, the Construction division performed well with revenue up 16%, with higher work volumes arising from key infrastructure projects."

The  company said the most active part of the residential housing market continued to be in the lower price point, first-home buyer segment, "an area of strength for Fletcher Residential".

This was supported by the introduction of promotions such as a $10,000 First Home Buyer Grant, providing strong market differentiation. As a result, 304 units (including 21 apartments) were taken to profit compared to 419 units (including 47 apartments) in the prior period, with 114 contracts already executed to settle in the second half of FY25.

In briefly commenting on the outlook for Fletcher Building for the remainder of the financial year to June 30, Reding said the macroeconomic pressures are expected to persist and economic activity to remain subdued at below mid-cycle levels.

"Despite this, we remain focused on what we can control: delivering operational excellence, tightly managing costs, prioritising safety, and providing the best possible service to our customers. I look forward to sharing further details on our strategic review prior to our upcoming Investor Day in June 2025."

This is the company's results presentation.

This is the company's half-year financial report.