Fletcher Building has climbed out of two years of heavy losses, reporting a net profit of $228 million for the year to 30 June 2026, but shareholders will go a third straight year without a dividend.
The result, released to the NZX before the market opened on Wednesday, reverses a $419 million after-tax loss in the 2025 financial year and a $227 million loss the year before that. Earnings per share came in at 21.2 cents, the first positive figure since 2023. Group earnings before interest and tax swung from a $236 million loss to a $373 million profit.
Revenue from continuing operations rose 7.3 per cent to just under $6 billion, from $5.5 billion. Earnings before interest and tax and before significant items reached $414 million, up $85 million on the prior year, though roughly $52 million of that came from selling surplus property rather than from making and selling building materials.
The balance sheet is the clearest sign of change. Operating cash flow jumped to $715 million from $214 million. Net debt fell to $637 million from $999 million, helped by about $450 million raised through asset sales, including the January sale of the construction division to French group VINCI Construction for $315.6 million. That deal removed the part of the company responsible for the New Zealand International Convention Centre overruns that triggered the crisis in the first place.
Chief executive Andrew Reding told investors the company “is significantly more resilient than it was 12 months ago”, pointing to the simplified portfolio and lower debt. On the analyst briefing he framed the year as a milestone rather than a finish line, saying “the end of financial year 2026 signifies the end of the first stage of our turnaround” and that the next stage would be about “finding and proving up where growth comes from inside the core”.
The trading divisions carried the result. Light Building Products lifted earnings 22 per cent and Heavy Building Materials grew 8 per cent. Distribution, which had a poor first half, returned to profit in the second. Winstone Wallboards lifted sales volumes 4 per cent, with the South Island up 11 per cent, and PlaceMakers grew its own frame and truss production 27 per cent as it took more of that work in house.
Cost cutting did the rest of the work. Fletcher took roughly $50 million of structural cost out of the business during the year, though inflation clawed back most of it, leaving a net reduction of about $23 million. Technology spending fell 20 per cent and corporate costs fell 21 per cent. Return on invested capital for the group was 5.3 per cent, or 4.7 per cent once the land sales are stripped out, which is still well short of what the company needs to earn to justify its asset base.
Residential was the weak link. The division took 536 properties to profit over the year, down from 666, with Auckland facing what the company described as elevated market inventory and price pressure. Canterbury held up better. The board also decided in June that Vivid Living, the retirement village business Fletcher launched at Red Beach north of Auckland, met the test to be classified as held for sale, and the company says it is actively progressing a divestment.
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The dividend is where the good news stops. The board declared nothing, and set out the conditions for bringing payouts back rather than a date. Fletcher says the dividend policy will be reset and communicated to shareholders once the group is generating positive free cash flow and net debt sits in the lower half of its target range of $400 million to $900 million. At $637 million, net debt is currently a little above the midpoint, so the company is close on that measure but not there yet.
Investors had reason to hope for more. In early July the company lifted its full year earnings guidance to between $400 million and $403 million and the shares rose about 7 per cent on the day. Some of that fourth quarter strength, Fletcher warned at the time, came from customers buying ahead of expected price rises, demand that would normalise in the first quarter of the new financial year.
Reding was cautious about the year ahead. He does not expect a meaningful recovery in underlying volumes until calendar 2027, and said the first half of the 2027 financial year would be weighed down by an uncertain economic backdrop and by the general election. Capital spending is due to step down to about $170 million, and the new Tauriko oriented strand board plant near Tauranga is expected to open at the end of this calendar year, with setup costs offsetting the benefit in the first year.
The wider construction picture is more encouraging than Fletcher’s own residential numbers suggest. Stats NZ figures show 40,581 new homes were consented in the year to June 2026, up 19 per cent and the first time the annual total has passed 40,000 since 2023. Auckland accounted for 17,097 of those. The catch is that consents lead actual building work by many months, and the seasonally adjusted monthly figure fell 3.6 per cent in June after a 4.9 per cent fall in May, so the pipeline is filling unevenly.
That is the tension in this result. Fletcher Building has fixed what it could control, selling the division that nearly sank it, halving the debt burden and squeezing out cost. What it cannot control is when New Zealanders start building again in volume. Until that happens, the company will keep banking cash rather than posting it out to shareholders.
Full detail is in the company’s financial results and announcements, with coverage from interest.co.nz and the NZ Herald.
Are you waiting on a Fletcher Building dividend, or seeing the building trade pick up where you are? Share your view in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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