Fletcher Building shares tumble after downbeat trading update
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More news: Fletcher Building shares dropped after the building products group warned of further declines in trading volumes and margins pressure during the first quarter.
Fletcher shares were down 3.5% to $2.80 at 12:50pm AEDT. The stock is up 9.8% in the calendar year.
Fletcher Building flags trading volume declines and margin pressure in Q1
The news: Building products supplier Fletcher Building said it saw further declines in trading volumes and ongoing pressure on margins during the first quarter, amid continued weak demand across its key markets and heightened competitive activity, particularly in New Zealand.
The context: Managing director and CEO Andrew Reding said the company is continuing to "carefully examine" its cost base given the "continued deterioration in market conditions".
Fletcher's cost-out programme is targeting NZD100 million ($88.2 million) in annualised savings, with around NZD50 million in benefits expected to be realised in the second half of FY26.
The cost-out programme is primarily focused on back-office operations and efficiencies, the company said, and will partially offset the earnings impact of market conditions.
Auckland-based Fletcher said light building products volumes in the first quarter were "generally below" the prior corresponding period, while its heavy building materials division experienced "some pronounced volume contractions".
The company said it expects market conditions to remain challenging throughout the remainder of the financial year, with continued uncertainty on the timing of recovery in the residential sector.
However, it noted the recent cuts to New Zealand's official cash rate should lead to increased liquidity in the country's housing market, and pointed to signs of "steadying or improving" market conditions in Australia.
The source: ASX
