Latest / Best of Business / Andrew Reding: Fletcher Building CEO on the company returning to profit after downturn

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Andrew Reding: Fletcher Building CEO on the company returning to profit after downturn · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk zed B.
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  Speaker 2: Now.
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  Speaker 3: Fletcher Building appears to have made a major turnaround. The
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  Speaker 3: company has posted a two hundred and twenty eight million
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  Speaker 3: dollar net profit after tax for the year to June.
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  Speaker 3: That is quite a change from the four hundred and
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  Speaker 3: nineteen million dollar loss in the previous year. Andrew Ridding
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  Speaker 3: is Fletcher Building CEO. Hi, Andrew, Hi, Heather, I bet
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  Speaker 3: you're feeling good after that result.
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  Speaker 2: As I say, I'm feeling fan bloody tastic. It's a
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  Speaker 2: positive step in the right direction. It's not the end
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  Speaker 2: of the journey, but it's a very good start.
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  Speaker 3: How much of that is one offs like sales versus
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  Speaker 3: how much of that is actually your business performing much better?
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  Speaker 2: Look, it's a combination of the two. As we came
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  Speaker 2: into the year, the market was actually continued to worsen,
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  Speaker 2: so we had to turn around and execute and plan
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  Speaker 2: the actions, which were the sale of excess land and property,
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  Speaker 2: which contributed about fifty two million to the EBIT line
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  Speaker 2: and that's not repeatable. But on the other hand, the
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  Speaker 2: businesses themselves did improve performance significantly, significantly during the course
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  Speaker 2: of the year, and I couldn't tell you off the
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  Speaker 2: top of my head the improvement on year on year
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  Speaker 2: profit from the continuing operations, but I think it was
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  Speaker 2: around about sixty five million.
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  Speaker 3: And then how much of that, again, is you guys
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  Speaker 3: improving the way you do business versus just the economy
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  Speaker 3: improving For a.
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  Speaker 2: Bit there, the economy hardly improved. I say, we saw
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  Speaker 2: it continuing to slide in the first quarter, flattened in
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  Speaker 2: the second. There was a slight uplift in the last half,
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  Speaker 2: but most of it's because we've done a huge amount
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  Speaker 2: of change here. So we've decentralized the organization. We've taken
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  Speaker 2: out a lot of corporate costs and a lot of overhead,
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  Speaker 2: so all of that's now flowing through to the bottom line.
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  Speaker 3: How's the residential market outlook going for you?
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  Speaker 2: It is very weak at the moment. If you think
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  Speaker 2: about the market overall, the trouble is we've got some
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  Speaker 2: positive tailwinds on it and then we've got some negative headwinds.
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  Speaker 2: So if you think about the positives, we know that
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  Speaker 2: there's now an annualized forty thousand consents, which is the
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  Speaker 2: first time that's happened since twenty twenty three. Net migration
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  Speaker 2: has firmed up from where it was about a year ago,
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  Speaker 2: so it used to be fourteen thousand, now it's coming
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  Speaker 2: up to around about twenty thousand. And the interest rates
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  Speaker 2: the ocr even though it went upper quarter of a percent,
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  Speaker 2: is still stimulatory. So those are all things that would
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  Speaker 2: turn around and encourage you to believe the market could
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  Speaker 2: be buoyant. But against that is you've got the uncertainty
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  Speaker 2: in the Middle East, You've got the uncertainty of the
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  Speaker 2: election coming up, You've got some uncertainty around where interest
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  Speaker 2: rates are going to head to. Then, probably most importantly,
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  Speaker 2: there's a huge overhangover existing housing stocks. So there's thirty
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  Speaker 2: five thousand houses on the market now, which is the
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  Speaker 2: highest since twenty fifteen. I think all that uncertainly means
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  Speaker 2: people put off making decisions, and for that reason, we've
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  Speaker 2: been saying we don't expect to see a major lift
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  Speaker 2: in volumes for the first half of our financial year
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  Speaker 2: twenty seven, but in the second half we would expect
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  Speaker 2: to see something flowing through.
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  Speaker 3: Andrew for such a long time, there has been such
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  Speaker 3: a hurry to get more houses built. Do you think
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  Speaker 3: given that overhang. Now we could sort of calm down
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  Speaker 3: a wee bit, or do we still need to keep
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  Speaker 3: the pace up?
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  Speaker 2: That I think is an extremely good question. There is.
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  Speaker 2: I think there's no doubt that the overhang of housing
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  Speaker 2: shortage has diminished significantly, but a lot of the demand
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  Speaker 2: for it will be driven by that whatever happens that
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  Speaker 2: net migration number. So as we see the economy pickup,
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  Speaker 2: when we see fewer key we's going offshore, we see
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  Speaker 2: the immigration numbers still keeping constant, I think you'll start
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  Speaker 2: to see that housing shorty possibly growing again. So I
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  Speaker 2: wouldn't want to see us necessarily taking our foot off
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  Speaker 2: the accelerator in terms of house building. Is just it
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  Speaker 2: may not be quite so urgent today as it might
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  Speaker 2: be going forwards.
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  Speaker 3: Yeah, fair enough. Hey, how are you going, by the way,
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  Speaker 3: with the sale of Fletcher Living.
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  Speaker 2: Well, Look, we're in the middle of some delicate commercial negotiations,
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  Speaker 2: so it's not something I really want to talk about.
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  Speaker 2: I have to say, Lord.
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  Speaker 3: That makes me even more curious as you'd well imagine election.
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  Speaker 3: You spoke about the election before and the uncertainty that
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  Speaker 3: it has on your business, and I mean this is
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  Speaker 3: a cross across industry really isn't it as a cross
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  Speaker 3: business that it does?
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  Speaker 1: That is it?
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  Speaker 3: What is it about the election for you guys? Is
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  Speaker 3: it the possibility of a change of government that's freaking
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  Speaker 3: people out of weebit?
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  Speaker 2: Look, the uncertainty I refer to is less us in
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  Speaker 2: the business, and it's about its impact on the people
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  Speaker 2: who buy our products. And a lot of people aren't
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  Speaker 2: going to turn around and be investing in a new
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  Speaker 2: house if they're unsure what the the landscape's going to
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  Speaker 2: look like going forward. And this is traditional in New Zealand.
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  Speaker 2: We always get this uncertain apping around about the election time.
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  Speaker 3: But I mean you're talking about texts, aren't you potential Texas?
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  Speaker 2: I'm talking about whatever things worry consumers.
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  Speaker 3: Yeah, that would be Texas. Andrew, thank you so much,
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  Speaker 3: Really enjoyed talking to you. That was Andrew Ridding, the
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  Speaker 3: CEO of Flincher Building.
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