Fletcher Building’s Share Price Falls on New Earnings Guidance

At time of writing, the share price of Fletcher Building Limited [ASX:FBU] is down 9.17%, trading at $4.705 per share.

Fletcher Building is New Zealand’s largest construction firm which delivers homebuilding, major construction and infrastructure projects.

It has been a tough three months for the company, with the slowdown in the Australian housing market having an impact:

Fletcher Building Share Price

Source: marketindex.com.au

Fletcher Building is one of the infrastructure stocks we detail in our free report, available to download here.

Earnings guidance down on Australian housing market exposure

The company said in an announcement:

Fletcher Building expects that EBIT before significant items for HY2019 will be approximately 10% lower than the EBIT before significant items and B+I losses reported in HY2018 … due to emerging challenging Australian trading conditions and the timing of house sales in the Residential Division to date.’

It continued saying:

FY2019 Guidance: Fletcher Building expects EBIT before significant items for FY2019 to be in the range of $630m to $680 million.

Given that the residential market accounts for about 40% of Fletcher Building’s business in Australia, it appears that the company’s earnings will be under pressure for the foreseeable future.

Where does Fletcher Building’s share price go from here?

With a mix of major infrastructure projects in New Zealand and Australia ‘in the pipeline’, Fletcher Building has some ammunition going forward if the residential property market continues to fall off.

However, a sharp dip in the Australian residential market, due to a credit crunch for example, could lead to Fletcher Building revising its earnings again.

These factors could result in some mixed share price performance for Fletcher Building.


Lachlann Tierney,
For Money Morning

PS: There are a host of companies that are set to benefit from the infrastructure boom. Get the names in our free report available here.


Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Lachlann is involved in two publications:

Money Morning Australia