FY21 swings to NZ$305m profit as net debt falls to NZ$173m

Net profit after tax moved from a NZ$196m loss to NZ$305m, with EBITDA of NZ$1b disclosed for the current period only.

Operating cash flow more than doubled to NZ$889m from NZ$410m, and free cash flow excluding legacy projects was NZ$652m on capex of NZ$231m (2.8% of revenue). Gross borrowings fell 52.1% to NZ$857m and net debt dropped to NZ$173m from NZ$687m, even though cash on hand declined to NZ$666m from NZ$1.1b as drawn facilities were repaid.

The board declared a final dividend of 18cps, taking the full-year FY21 dividend to 30cps versus 23cps in FY20.

Capital raise adds balance-sheet context, with NZ$925m capital raised, but borrowings and gearing are the direct leverage evidence.

The swing to profit is genuine rather than tax-flattered. Profit before tax improved 263.4% while NPAT improved 255.6%, a gap of just 7.8 percentage points, so the underlying operating recovery is what is driving the result. Revenue grew across a wider base, with Australia now the largest segment at 34% of revenue and Concrete revenue up to NZ$849m from NZ$503m. The implication is that the recovery is broad rather than concentrated in one cyclical pocket.

Cash generation is the standout. OCF/EBITDA of 86.1% and FCF/NPAT of 213.8% indicate the reported earnings are backed by cash, and inventory days fell to 65.5 from 75.7 while receivable days were unchanged at 37.3. Operating working capital was roughly flat (down NZ$25m), so the cash uplift reflects earnings recovery rather than a working-capital release that would reverse.

Segment quality is uneven. Construction generated a 2.1% margin on NZ$1.5b of revenue and Australia 3.7% on NZ$2.8b, while Residential and Development delivered a 21.0% margin on NZ$734m. The mix means group margin is exposed to whether the lower-margin franchises can lift returns or whether Residential continues to carry the result.

HY21 contributed 49.1% of full-year revenue but only 39.7% of full-year NPAT, implying second-half NPAT of around NZ$184m versus NZ$121m in the first half. The second half therefore carried the margin recovery, which raises the bar for FY22 to demonstrate that the H2 run-rate is sustainable rather than a rebound from COVID-affected H1 comparators.

The 30cps full-year dividend represents an 81.1% payout against NPAT but only 15.2% against free cash flow excluding legacy projects, so distribution capacity looks comfortable on a cash basis even if NPAT normalises.

Cash conversion is strong, capex intensity is contained at 2.8% of revenue, and the deleveraging is structural rather than cosmetic: gross debt fell by NZ$934m and net debt by NZ$514m, leaving net debt/EBITDA at 0.17x. ROE swung to 8.1% from -5.5%.

Two caveats temper the read. First, prior-period EBITDA is not disclosed, so the OCF/EBITDA conversion has no comparable benchmark and cannot be characterised as improving or deteriorating versus FY20. Second, segment margins outside Residential and Development and Building Products remain thin, so the group-level recovery depends on volumes and price holding in Construction and Australia. The inventory drawdown also flatters operating cash flow modestly and is unlikely to repeat at the same scale.

This briefing cannot assess forward earnings trajectory or management's FY22 plans because no guidance, forward-work figures, or stated targets are disclosed in the supplied material.