Fletcher Building raises prices to mitigate fuel price surge
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The news: Fletcher Building is lifting prices across its divisions in response to rising diesel and fuel costs and sees “early signs of demand softening are emerging”, including project delays.
The numbers: Fletcher Building told the exchange that its price increases range from “modest (about 1-5%) to more significant in plastics (up to 36%)”, which includes fuel-linked surcharges and reflecting input cost pressures.
A 10-cent increase in unhedged diesel prices results in an incremental cost of approximately $3.4 million per year at a group level or $2.4 million when excluding the construction business, which is being sold to Vinci Construction.
A 10 cent increase in petrol prices would equate to about a $200,000 per year incremental increase in cost at a group level.
Fletcher consumes about 36 million litres of fuel annually, of which 94% is diesel. The heavy building materials business accounts for more than half of total consumption, with the Construction division accounting for nearly a third.
The context: Fletcher said the impact of the Middle East crisis on full-year financial performance “cannot be ascertained with certainty at this time”.
Fletcher also reported its March quarter volume report, which managing director and CEO Andrew Reding said showed “early signs of improvement across the portfolio” ahead of the Iran war’s impacts.
The source: ASX
