NZ's Fletcher Building posts 17% drop in annual profit, flags weak demand

(Reuters) -New Zealand's Fletcher Building reported a 17% drop in its full-year underlying profit on Wednesday, weighed down by softer demand for its building products, and forecast lower volumes in its domestic market in the ongoing business year.

Fletcher, which derives about 70% of its revenue from the Materials and Distribution divisions in New Zealand and Australia, faced lower demand in its two key markets.

As a result, underlying operating earnings at the Materials and Distribution divisions, which include the building products and related distribution businesses in New Zealand, slipped to NZ$314 million ($184.98 million) from NZ$448 million a year ago.

That pushed Fletcher's underlying post-tax earnings to NZ$152 million for the year ended June 30, compared with NZ$183 million reported a year ago. That narrowly missed the Visible Alpha consensus estimate of NZ$153.4 million.

"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."

The firm expects volumes to remain low in New Zealand due to subdued demand throughout the current fiscal year, and also flagged mixed demand signals in Australia.

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

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 = 1.6975 New Zealand dollars)

(Reporting by Sneha Kumar and Nichiket Sunil in Bengaluru; Editing by Alan Barona and Maju Samuel)