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Australia Financial Summary
Australia FY18 Revenue Weighted Sector Exposure
Year ended 30 June
2018 NZ$m
2017 NZ$m
Change NZ$m
Change %
25%
Gross revenue
3,076
2,858
218
8%
34%
External revenue
2,973
2,771
202
7%
44% 41%
114
119
(5)
(4%)
EBIT before significant items 1
Funds
1,804
1,778
26
1%
Trading cashflow
146
143
3
2%
34%
22%
1 EBIT before significant items is a non-GAAP measure used by management to assess the performance of the business and has been derived from Fletcher Building Limited’s financial statements for the year ended 30 June 2018.
Residential Non-residential Infrastructure/other
on procurement strategies and controlled operating costs. With a strong focus on delivering consistently high customer service levels, Steel Australia reported gross revenue increases of 3% from FY17, while operating earnings before significant items were stable year-on-year. Significant items of $49 million primarily comprised an impairment charge against the carrying value of the Rocla business, following a revision of expected medium- term earnings. The division invested $79 million during the year including $8 million on Tradelink stores and showrooms, Laminex Press Refurbishment ($8 million) and a new Laminex digital platform ($5 million). In addition, there were a very large number of other capital expenditure projects of less than $5 million during the year. FUTURE FOCUS While the majority of the Australian businesses expect to be trading in flat or slightly declining markets, the newly formed division will focus on accelerating individual business unit strategies to deliver manufacturing, distribution and overhead efficiencies and increase its share of the Australian residential and commercial markets. To position the division for increased growth, a number of site network investments will be made or finalised in FY19. Iplex Australia opened a dedicated civil service centre in Melbourne in May, and will open service centres in Sydney and Brisbane in the first half of FY19. Tradelink plans to open a further 15 branches in FY19, while a site consolidation programme completed within Stramit in late FY18 will reduce property costs in both Victoria and Queensland and deliver further efficiency gains in the coming years.
DIVISIONAL PERFORMANCE OVERVIEW The Australian division reported gross revenue of $3,076 million, an increase of 8% from FY17. All businesses achieved positive sales growth, while the turnaround of Iplex Australia and Tradelink gathered momentum, with both businesses experiencing market share gains. Operating earnings before significant items were $114 million, a decrease of 4% on the prior year and largely driven by increased input costs. Building Products Australia delivered gross revenue growth of 9% from FY17, driven by strong performances from Laminex Australia, Iplex Australia and Fletcher Insulation. Rocla continued to underperform owing to operational issues. The forecast for industry demand in the pipe and precast segment is strong and the recent merger of the Iplex Australia and Rocla businesses is expected to accelerate the turnaround of Rocla. Despite this positive sales growth, Building Products Australia’s operating earnings before significant items decreased by 10%. Laminex Australia and Iplex Australia experienced sizeable increases in energy and raw material input costs, which we were not able to fully recover, while Fletcher Insulation incurred a $5 million Distribution Australia recorded gross revenue growth of 8% from FY17, with Tradelink growing sales in a declining market through 19 new store openings and relocations, and positive growth in the small to medium network customer market segment. Tasman Sinkware also grew revenue as it made a strategic shift to become both a manufacturer and master distributor of products. Distribution Australia’s operating earnings before significant items grew 30% from FY17, as Tradelink successfully delivered charge as a result of its structural reorganisation and associated redundancy payments.
We need to make Fletcher Building
Australia greater than the sum of its parts, build a customer-leading obsession, innovate, take number one positions and deliver above market growth.
Dean Fradgley Chief Executive Australia
Stramit
35 Fletcher Building Limited Annual Report 2018
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