From the ground up in Africa
More about our Building Products division
Building Products
Building Products provides building product solutions, from foundation to roof. The division's core plasterboard, insulation and metal roof tile business streams have leading market positions and respected brands.
Building Products' businesses include:
- Winstone Wallboards, the sole New Zealand manufacturer of plasterboard.
- Fletcher Insulation in Australia, and Tasman Insulation in New Zealand. These businesses lead the Australasian market in glasswool insulation, and own four of the six glasswool manufacturing plants in the region.
- Forman Group, the leader in commercial and industrial insulation and commercial ceiling and wall systems in New Zealand, and Tasman Access Floors, a leading provider of access flooring systems in Australia.
- Roof Tile Group comprising AHI Roofing, with manufacturing plants in New Zealand, Malaysia and Hungary, and Decra Roofing Systems in the USA, make Fletcher Building the leading global supplier of stone chip coated metal roof tiles.
- DVS Healthy Homes dedicated to improving home health and comfort for New Zealanders through offering a complete range of insulation and building solutions through group businesses DVS, PinkFit, and Home&Dry Group.
Complementary businesses in the division include Tasman Sinkware in Australia which manufactures high-end sinkware, and Fletcher Aluminium which designs and manufactures aluminium window and door systems.
Performance overview
Building Products recorded eight percent growth in operating earnings to $114 million, up from $106 million in the previous year, while sales increased four percent to $798 million. Key factors affecting earnings were the benefits of cost rationalisation and restructuring, a strengthening of residential construction markets, the impact of the New Zealand government insulation scheme, and strong sales in the roof tiles business. These benefits were partially offset by the termination of the Australian insulation scheme, and weakness in the New Zealand non-residential construction sector. Cashflow benefited from strong control of capital expenditure and working capital.
Operating earnings for the plasterboard business were up three percent despite lower sales. This was due to cost rationalisation undertaken in the previous period, and a strengthening of the New Zealand residential construction market in the second half. The business also consolidated its strategic focus with the divestment of the Hong Kong based commercial interiors operation at 30 June.
Operating earnings for the insulation business were down ten percent due to the termination in February of the Australian government's home insulation scheme. This resulted in the suspension of operations at the Sydney glasswool manufacturing plant and significant restructuring at the Melbourne plant. Consequently, restructuring charges of $18 million were incurred in the second half of the year. New Zealand glasswool volumes were stronger, driven by the New Zealand government's insulation scheme. The year also saw the consolidation of various New Zealand home performance initiatives under the Healthy Home Group banner. The commercial insulation, and ceiling and wall systems businesses were affected by further weakening of conditions in the New Zealand non-residential construction sector.
Operating earnings for the roof tiles business were up 59 percent due to improved raw material prices, strong volumes into Africa, improved volumes in New Zealand and the receipt of final insurance proceeds from the fire at the United States plant in the previous year. These were partially offset by the impact of a strong New Zealand dollar on export returns and weak volumes in Europe and Japan. The new Hungarian plant continues to operate to expectations, although weaker European volumes reduced manufacturing efficiencies. The business undertook significant global restructuring and consolidation during the period.
Back to topLooking ahead
Significant cost rationalisation across the division as markets turned down, together with the major upgrade undertaken at the Melbourne glasswool manufacturing plant during the period, has left the division with strong operating leverage. This was an advantage as economic activity started to improve during the year. This strong base is supported with a sharpened strategic focus and an emphasis on new product development. The combination of these factors has positioned the division to achieve further improvement as key residential markets continue to turn up.
A key focus of the New Zealand insulation businesses will be to continue to work with New Zealand's Energy Efficiency and Conservation Authority, EECA, and respond to the opportunity presented by the New Zealand government insulation scheme, and to public interest in sustainability and energy efficiency through the DVS Healthy Home Group. Over the course of the coming year the Australian insulation business will need to work through a large inventory of batts left over from the termination of the Australian government insulation scheme, but with an improved manufacturing footprint it is strongly positioned once that process has been completed.