NZ's Fletcher Building posts annual profit drop, flags weak demand

New Zealand's Fletcher Building FBU reported lower full-year profits on Wednesday and forecast weaker demand in its domestic market for the ongoing business year, as the construction materials maker faces a challenging demand outlook.

Fletcher expects volumes to remain low in New Zealand, where the cyclical housing market remains subdued because of soft labour conditions and lower affordability.

"FY25 has been one of the most demanding years in recent memory, both for Fletcher Building and the industries in which we operate," said CEO Andrew Reding.

"Our businesses faced tough market conditions, as well as undertaking significant internal change."

However, the firm's shares rose 2% to NZ$3.13, while the broader equities gauge, the S&P/NZX 50 NZ50G, was largely flat by noon in Wellington.

Jeremy Sullivan, a Hamilton Hindin Greene investment adviser, attributed the stock movement to Fletcher slashing its debt to roughly NZ$1 billion ($589.20 million) as of June 30, from NZ$1.77 billion a year ago.

Investors also took heart in Fletcher staying on track to deliver the long-delayed NZ International Convention Centre project in Auckland later this year, Sullivan said.

Fletcher's Materials and Distribution division, which manufactures, distributes and sells construction and plumbing products as well as cement and concrete products, faced lower demand in Australia and New Zealand in the year ended June 2025.

As a result, the division's underlying operating earnings slipped to NZ$314 million, down from NZ$448 million in fiscal 2024.

That pushed Fletcher's underlying post-tax earnings lower to NZ$152 million for the year, compared with NZ$183 million reported a year ago, narrowly missing the Visible Alpha consensus estimate of NZ$153.4 million.

On a statutory basis, which includes one-off charges of NZ$702 million, Fletcher reported a bigger full-year loss of NZ$419 million, compared with NZ$227 million loss it reported last year.

The one-off charges relate to its cost overruns in the international convention centre project, business closures and issues related to its plumbing failures in Western Australia.

Fletcher's construction arm, which is at the heart of a lawsuit over delays in completing the Auckland convention centre, received acquisition interest in June, but the company has yet to make a final decision on the segment.

The company did not declare a final dividend for the second year in a row. It last paid a full-year dividend of 34 New Zealand cents per share in fiscal 2023.

($1 = 1.6972 New Zealand dollars)