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Speaker 1: Now. Fletcher Building today announced a two hundred and twenty

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Speaker 1: seven million dollar net loss after tax. Not going well.

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Speaker 1: It's already warning of a challenging year ahead. Sam Trathuiz

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Speaker 1: from Milford Assett Management osam good evening. Either did the

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Speaker 1: company's performance meet the investor expectations or not?

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Speaker 2: I think it would be fair to say investor expectations

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Speaker 2: were not at all high going into the result, given

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Speaker 2: what has been going on in the economy and also

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Speaker 2: within fletcher itself. So look, the headline numbers reported were weak.

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Speaker 2: If you strip down the business and look at the

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Speaker 2: core profitability, looking at earnings before interest, tax and all

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Speaker 2: the big one offs that are going on within Fletcher's,

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Speaker 2: it was just above five hundred million, so that's down

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Speaker 2: nearly three hundred million on the prior year. There were

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Speaker 2: a few new big one offs in there, one hundred

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Speaker 2: million dollar impairment against the Higgins runing business, but fortunately

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Speaker 2: no new issues arising from some of those legacy construction projects.

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Speaker 2: I think the outlook was probably the key area of

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Speaker 2: interest and the reasons that shares. The share price of

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Speaker 2: Fletcher's traded lower today initially, so they indicated that they

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Speaker 2: are planning for volumes in the year ahead to be

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Speaker 2: down ten to fifteen percent across their materials and distribution businesses.

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Speaker 2: That's getting worse on last year, essentially signaling that the

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Speaker 2: weakness there is more weakness to come, there's more earnings

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Speaker 2: pressure in the year ahead.

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Speaker 1: Do you think Fletcher's management has just been conservative here

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Speaker 1: or do you reckon they are being realistic about what's

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Speaker 1: going on.

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Speaker 2: Often when there is significant management change in listed companies,

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Speaker 2: it's pretty common to see a clearing of the decks.

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Speaker 2: So essentially a reset of investing expectations or very conservative

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Speaker 2: guidance statement or outlook statement going forward that is really achievable.

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Speaker 2: But in this case, I think it is a realistic

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Speaker 2: of view rather than that conservative statement. Fitture's CFO Bevn

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Speaker 2: McKenzie indicated that they really are seeing those volume declients

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Speaker 2: at present over the last month or so compared to

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Speaker 2: last year of that ten to fifteen percent range, and

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Speaker 2: its products at the earlier stage of the the building cycle,

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Speaker 2: so rather than those finishing trades. So the challenge for

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Speaker 2: investors the market is to think about how that could change.

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Speaker 2: Is that say like that all yeh, And the key

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Speaker 2: there really being what impact will the OCR cuts, the

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Speaker 2: interest rate cuts from the arbens you'd have on the business,

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Speaker 2: on the residential market, the construction market, and how quickly

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Speaker 2: will that come through?

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Speaker 1: Heather Sam the new CEO incoming, obviously not there yet,

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Speaker 1: Andrew Reading, what do you expect his priorities are going

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Speaker 1: to be?

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Speaker 2: Look for Andrew, he was actually part of Fletcher's old

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Speaker 2: guard you could call back in the early two thousands

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Speaker 2: before doing some time at Graham Heart's Rant Group. He

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Speaker 2: knows the business, but I think initially there's a decent

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Speaker 2: list of issues still requiring a big fix, and it

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Speaker 2: came through pretty pretty clearly today that at the top

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Speaker 2: of that list will be the balance sheet or the

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Speaker 2: debt that they have, and the company has received several

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Speaker 2: waivers on its banking covenants and spending is being pulled back,

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Speaker 2: but it's very much at the top end of where

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Speaker 2: they would like it to be. So they're thinking about

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Speaker 2: what business units can be sold or perhaps capital taken

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Speaker 2: out of. Maybe something like the Fletcher Living Home to

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Speaker 2: building division could be one that that is sort of

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Speaker 2: prime for that opportunity. So that's Number one issue for him.

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Speaker 2: Number two is probably sorting out IDEX pipes, so the

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Speaker 2: faulty pipes over in Western Australia that they are facing

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Speaker 2: a few problems with, so plenty for him to fix

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Speaker 2: before he can really get onto thinking about growing and

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Speaker 2: returning the business to what it will used to be.

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Speaker 1: So right, Hay, Sam, thank you very much appreciated mate.

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Speaker 1: As always, samra Thu, we have Milfed Asset Management. For

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Speaker 1: more from Hither Duplessy Allen Drive.

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