Fletcher Building Annual Review 2015
Building Better, Together At Fletcher Building we stand together, work together, forge ahead, overcome adversity and meet new challenges together. Our unique skills and expertise, unmatched resources and vision enable us to keep building better, together. Heavy Building Products Light Building Products WINSTONE AGGREGATES ROOF TILE GROUP
We’re Our product almost quality is like family, important, it’s more it’s what we than just stand by. a team. SARAH WIDDUP
WHIO MANUEL Whio Sarah
Laminates & Panels Distribution LAMINEX PLACEMAKERS
We focus We want on being PlaceMakers progressive to be the and easiest innovative place for for our customers customers. to do DAVID MILES business. David Alma ALMA SANTOS
Laminates & Panels Construction LAMINEX INFRASTRUCTURE
It’s great Be Bold is here and what this it’s getting project is all better and about. This better all is a first in the time. NZ – you GESSE RIPAKI couldn’t do it without being bold. Gesse Glen GLEN KIRK Group financial highlights
Net earnings $M 270
Revenue $M 19,000+ 8,661 People working and building Operating earnings $M together. Making and delivering a diverse range of products and 503 projects that enable communities to grow, cities to prosper and Dividend per share cents countries to be more productive. 37.0
Earnings per share cents 39.2 02 Fletcher Building Annual Review 2015
At a glance 2015
Heavy Building Products Light Building Products Laminates & Panels
New Zealand residential New Zealand Laminates & Panels consents and building plasterboard business continued to focus activity continued to grow this year saw good on innovation and above long run trends growth. operational excellence.
while civil infrastructure There was significant turnaround in Manufacturing and supply chain activity was supported the insulation businesses and there excellence programmes have by strong and ongoing is a strong outlook following building continued at 15 major manufacturing consent increases in New Zealand and sites across the world with our government investment. Australia. The roof tile businesses have other sites focused on improving had a challenging year with mixed performance and efficiencies. Much of the growth in the concrete markets across the globe. market continued to be driven by Laminex Australia has developed a activity in Auckland and Christchurch. Product innovation and online strategy to diversify to provide growth Australian residential construction tools developed are proving to be outside of traditional markets. In activity remained stable while other popular with our customers. Asia our business has successfully market segments were very challenging. developed new products with antimicrobial qualities.
GROSS REVENUE GROSS REVENUE GROSS REVENUE $2.1b $1.3b $1.8b
EBIT* EBIT* EBIT $177m $118m $129m
PEOPLE PEOPLE PEOPLE 3,209 2,526 5,238
25% 17% 19% OF GROUP EBIT + OF GROUP EBIT + OF GROUP EBIT +
* EBIT excluding significant items + EBIT excluding corporate costs and significant items 03 Fletcher Building Annual Review 2015
Distribution New Zealand Distribution Australia Construction
Both Mico and Tradelink has delivered Every business unit PlaceMakers stores a second consecutive experienced a record launched customer year of sales and volume of work and service promises and profit growth. The earnings.
PlaceMakers made a year also marked Fletcher Construction delivered bold industry publication the transition from significant projects across New Zealand of its customer service turnaround recovery to and the South Pacific. The amount of new work secured in engineering, scores during the year transformative growth. commercial building and public infrastructure is at record levels. to reinforce that the The Australian plumbing products customer is at the heart market has grown in FY15 and Tradelink Fletcher Living produced earnings of everything we do. has retained the market share gains growth of 35% to $66 million. The from FY14. South Pacific business recorded record Promoting diversity, inclusiveness revenue this year. Tradelink developed and launched and significantly investing time two significant own branded product and resources into learning and ranges – PEX and Raymor. development saw employee engagement scores at record highs.
GROSS REVENUE GROSS REVENUE GROSS REVENUE $1.8b $0.8b $1.6b
EBIT* EBIT EBIT* $108m $18m $140m
PEOPLE PEOPLE PEOPLE 3,196 1,631 3,352
16% 3% 20% OF GROUP EBIT + OF GROUP EBIT + OF GROUP EBIT + 04 Fletcher Building Annual Review 2015
From the smallest grain of sand to projects of great scale, we make, deliver and build to improve infrastructure, build communities and strengthen economies.
make.
MANUFACTURE AND SUPPLY
HEAVY BUILDING PRODUCTS LIGHT BUILDING PRODUCTS LAMINATES & PANELS
Winstone Aggregates Winstone Wallboards Laminex
Rocla Quarry Products Tasman Insulation Formica
Golden Bay Cement Fletcher Insulation
Firth Stramit Building Products
Rocla Pipeline Products Fletcher Aluminium
Humes Dimond
Iplex Pipelines Roof Tile Group
Tasman Sinkware 05 Fletcher Building Annual Review 2015
deliver. build.
MERCHANT DISTRIBUTION CONSTRUCTION
DISTRIBUTION CONSTRUCTION
Mico Fletcher Living
Easysteel Building + Interiors
PlaceMakers Infrastructure
Tradelink Earthquake Recovery (EQR)
Fletcher Reinforcing South Pacific
Pacific Coilcoaters 06 Fletcher Building Annual Review 2015
Chairman & CEO Report Always striving for better
Sir Ralph Norris CHAIRMAN Mark Adamson CEO 07 Fletcher Building Annual Review 2015
Dear Shareholder, building activity continued at levels above DIVIDEND long-term trend, driven by the buoyant The total dividend for the year is 37 cents per It gives me great pleasure to write to you for Auckland housing market and new house- share. The increase is in line with underlying the first time in my capacity as chairman. building activity in Canterbury. Government earnings performance. This represents a Since taking on the role last October, I have funded infrastructure activity remained pay-out ratio of 64% of net earnings before had a particular focus on supporting the strong, and there was a marked increase in significant items, and is comfortably within management team in their pursuit of the non-residential activity with consents rising the target dividend pay-out ratio range of strategy that has been agreed with the 18% over the year. These activity levels 50% to 75% of net earnings. We expect to board. flowed into increased demand for building grow the dividend over time as earnings materials and we saw excellent growth in grow, and to the extent that our cash Late last year, the board and management volumes for most of our core product lines. investment requirements allow. team undertook a review of the whole business portfolio and the returns that our Conditions in Australia were more mixed, and While our policy on franking and imputation businesses are generating. This work has operating earnings before significant items credits has not changed, there have been informed the group’s strategic direction. were down 30%. There was a sharp contrast insufficient Australian franking credits We recognise that we must deliver further between the buoyant residential housing available for distribution this year. This is due value from our existing operations, through market with record levels of new dwelling to the reduction in Australian earnings over revenue growth and market share gains, construction, and reduced expenditure in the the past two years. We have continued our and through effective cost and margin mining and resources sectors. past practice of fully imputing the second management. half dividend for New Zealand taxation Beyond New Zealand and Australia, purposes. In addition to pursuing organic growth, conditions have continued to be mixed. we will look to selectively invest where we Operating earnings were down 7%, with PEOPLE can see strong returns and where such continued weak conditions in Europe and I have been impressed with the various investments are sufficiently linked to our a more difficult trading environment programmes that have been implemented chosen growth priorities. Areas we are experienced in China but a strong across Fletcher Building to improve targeting for expansion include our performance from Formica in North America. employee engagement, train and develop residential development business in SIGNIFICANT ITEMS our people and grow the future leadership New Zealand, our civil and engineering pipeline. I would like to especially Our reported operating earnings for 2015 construction business and our distribution congratulate the human resources team who included significant items of $150 million businesses in both Australia and have delivered a number of award winning relating to the impairment of goodwill, site New Zealand. programmes which were recognised both closure costs and the sale of businesses. nationally and internationally this year. At the same time, we will continue to $78 million of goodwill arising from actively manage the business portfolio A particular highlight has been the acquisitions over the past decade was and will divest businesses which we have opportunity to meet a wide cross section impaired in the year, relating to the Forman, determined are not core to our future. of people from across the business. The Stramit and Tasman Insulation businesses. board has made a conscious effort to hold FINANCIAL PERFORMANCE The impairment was due to a reduction in meetings in centres other than Auckland, We recorded net earnings of $270 million the future earnings prospects of these and this has enabled us to meet with local for the year ended 30 June 2015, compared businesses; these impairments were management and hear first-hand about what with $339 million in the 2014 financial year. non-cash in nature. is happening regionally. The knowledge and The result included significant items In addition, we incurred site closure costs enthusiasm of those we have met has been totalling $150 million relating to the totalling $65 million including the closure of encouraging and reflects the positive culture impairment of goodwill and site closure the Crane Copper Tube business in Australia, that has been very clearly demonstrated to costs. Net earnings before significant items and site closures in Iplex Australia, Stramit, me since I joined the board. were $399 million, which were 10% higher Humes and Forman. The decision to close than the prior year. BOARD CHANGES sites is never easy, but we need to ensure In addition to the change in chairman last For the same period, operating earnings that we have the right footprint for our October, this past year saw the retirement (earnings before interest and tax) were manufacturing and distribution businesses of Gene Tilbrook. As a result of increased $503 million, compared with $592 million and that our cost base remains competitive. commitments in Australia, Gene indicated in the prior year. Operating earnings BALANCE SHEET AND that he would no longer be able to dedicate excluding significant items were CAPITAL MANAGEMENT the time required as a director of Fletcher $653 million, up 5% on the prior year and As a result of the strong increase in cash Building. We have benefited greatly from in line with earnings guidance. flow from operations, we continued to Gene’s financial and strategic experience Overall, the result was satisfactory and maintain a sound financial position while and his knowledge of the Australian market there were a number of standout accommodating higher capital expenditure and I thank Gene for his significant performances amongst our business units. levels and increased cash investment in contribution. What was particularly pleasing was a very Fletcher Living, our residential development Steve Vamos was appointed to the board strong cash performance, with operating business. It remains our intention to maintain in July. Steve has more than thirty years’ cash flow up 18% on the prior year. a conservative balance sheet structure and to target strong investment-grade credit experience in the information technology We experienced strong market conditions metrics as we have done in the past few and online media industry and has lived and in New Zealand with operating earnings years. worked in Australia, the USA and Asia. I am before significant items up 24%. Residential delighted that Steve has agreed to join the 08 Fletcher Building Annual Review 2015
Chairman & CEO Report continued
board. His extensive background in the year with a record work pipeline of technology and digital sectors has added MARK ADAMSON $2.4 billion. Strong demand for housing in considerably to our mix of skills around —Chief Executive Officer Auckland has resulted in record house prices, the board. which in turn benefited our residential development business. Steve’s appointment brings the board back to a full complement of eight directors. The residential housing market in Australia saw record levels of new dwelling I would like to record my appreciation to my construction, driven in large measure by predecessor Ralph Waters for the very This year’s annual review apartment and multi-unit construction smooth transition I have experienced since activity in the capital cities. We experienced I took over from him last October. reflects Fletcher Building’s vision and values, which strong earnings growth in a number of OUTLOOK businesses exposed to new housing Looking at the year ahead, we expect we have rolled out globally construction, particularly Laminex and New Zealand residential construction activity across the group. Fletcher Insulation which also benefited to continue at above average levels but the from restructuring programmes undertaken strong growth in consents for new houses Our vision is “Building Better, Together” and it in recent years. The Tradelink plumbing is expected to moderate. Recent high levels is supported by four values or behaviours: distribution business benefited from these of net migration into New Zealand and strong market conditions and also the continued strong demand for housing in • Be Bold initiatives we have had underway to Auckland are likely to underpin volumes. • Customer Leading reinvigorate the business. Outside of the Commercial construction activity should • Better Every Day residential market, conditions were much continue to grow in line with the significant more difficult. The broader construction upward trend in consented work observed • Play Fair industry has been adversely impacted by the over the past year. Government expenditure From the outset, we knew that the vision and reduction in capital investment in the mining on core infrastructure is expected to remain values would only be successful if they were and resources sectors and by lower at current levels. owned and shaped with input from a wide spending by both state and federal governments. This has negatively impacted In Australia, residential activity is likely to slow range of people across our businesses, in our concrete products business in particular. from recent peak levels but remain well order to drive what we want to become and We have been more directly impacted by the above long run average levels driven by how we need to deliver to our customers. collapse in demand for plastic pipes to apartment and multi-unit dwelling The best performing companies combine supply the coal seam gas expansion in construction. Commercial construction is strategy with a successful and engaged Queensland, which resulted in a significant expected to remain relatively subdued, while culture. And great culture is cultivated by a deterioration in the performance of the Iplex government infrastructure spending will be meaningful vision and accompanying values. Pipelines business. constrained by deficits at federal and state levels. Construction activity in the mining The launch of the vision and values was a day Beyond New Zealand and Australia, we and resources sectors is expected to trend I had been looking forward to since starting encountered a mix of economic conditions. down as large projects are completed and in as chief executive, and I am committed to In North America, Formica continued to response to weaker commodity prices. making sure they become part of the way we deliver strong earnings growth from do business. “Building Better, Together” is increased volumes. Conditions in Europe Residential and commercial construction about harnessing the skills and talents of over continued to be challenging, with an adverse activity levels in North America are expected 19,000 people at Fletcher Building. impact on pricing and volumes. Southeast to remain broadly consistent with the past OPERATING PERFORMANCE Asia remained buoyant with strong volume year. European conditions are likely to remain growth recorded, but in China we mixed with a generally weak economic Our operating performance this year was experienced slowing growth and a tough outlook. Further volume growth is expected characterised by differing market conditions competitive environment. in Southeast Asian markets but market in the key regions in which we operate. conditions in China are likely to remain In New Zealand, we experienced strong FBUNITE BUSINESS TRANSFORMATION INITIATIVES highly competitive. demand for most products we manufacture This year we continue to derive further and distribute, and operating earnings before benefits from the FBUnite business significant items were up 24%. Despite a transformation initiatives. The FBUnite generally flat pricing environment, margins programme is now completely integrated were able to be maintained due to prudent with our operating model. The FBUnite cost control. In this regard we saw the business transformation initiatives have SIR RALPH NORRIS benefits of the manufacturing excellence delivered benefits of $50 million up to —Chairman programme deliver through the absorption 30 June 2015. These initiatives are on track to of inflationary pressures. Our distribution deliver a further $50 million in benefits over businesses recorded strong gains in the next two years. operating earnings due to both volume increases and the cost benefits from running all distribution activities within the one division. Earnings from our Construction division were up strongly and we ended the 09 Fletcher Building Annual Review 2015
STRATEGY – DELIVERING ON THE CASH FLOW / INVESTMENTS HEALTH AND SAFETY ‘ART OF THE POSSIBLE’. A key highlight of this year’s result was the We have continued to have as a key priority The FBUnite programme has established 18% increase in cash flow from operations. the health and safety of our people, and centralised capabilities which can be This strong cash performance is partly this focus over the past decade has leveraged to drive our earnings performance attributable to the FBUnite initiatives, which delivered a remarkable reduction in the going forward. Having built this platform and have had a positive impact on working frequency of serious harm incidents. Over locked in the benefits, the focus for the capital through controlling inventory growth the last year, however, our rate of recorded management team has switched to working and reducing debtors. The result is and reportable injuries has plateaued. Our further to scope out what we have called particularly pleasing given the cash 12 month rolling average total recordable ‘the art of the possible’. This has involved investment that we have made in the injury frequency rate per million employee examining the potential for each business residential development business over the and contractor hours has risen for the first and how each might be capable of past year. As we indicated at the start of the time in the last five years from 6.0 to 6.4. In performing over the next few years. This year, capital expenditure was up on the prior June 2005 this rate was over 60. A priority exercise has been key in helping to prioritise year at $278 million. The increase was driven for the year ahead will be to further address capital investment, technology and principally by the investment in a number of the frequency of serious harm injuries and management resource. Information Technology (IT) projects that are better identification of actual and potential At the heart of the ‘art of the possible’ part of our drive to standardise systems critical risks. across the group and enhance our exercise is the pursuit of organic growth CONCLUSION opportunities rather than a particular digital capabilities. We have made excellent progress in the emphasis on growth through business STRUCTURE AND APPOINTMENTS past year. Through the FBUnite business acquisitions. These opportunities will be During the year, I announced a new transformation programmes, we have built pursued through the ongoing development organisation structure and changes in the capability to both deliver further of customer value propositions and through several executive leadership roles. Under the operational efficiencies and provide key better serving different customer segments new organisation structure, business units support to our businesses. We have further with a cost and service model that aligns have been combined to better align product clarified our strategic direction and customer needs and value. and service offerings to customers. This identified where the best future growth resulted in a reduction in the number of The strategic review that Ralph has opportunities lie, and refined the group individual business units with the creation of referenced has identified three areas of structure to deliver on these. Most larger business units. specific focus and action. importantly, we have met the demands of Two new divisions - Heavy Building Products our customers and delivered strong volume Firstly, a number of businesses will be and Light Building Products were formed and earnings growth in many parts of our prioritised for further investment where they under which the relevant business units will business. The goal we have set for the offer superior growth prospects. These report. More recently, we announced that the company this year is to deliver further include: New Zealand Construction, where Australian and New Zealand Distribution operational and financial performance we see strong potential to grow market share businesses, including PlaceMakers and improvements and execute our strategic and further leverage our core capability and Tradelink, would be formed under one growth initiatives. brand; expansion of our New Zealand Distribution division. residential development activities; and Distribution in New Zealand and Australia, As a result of these changes, it was where we have identified opportunities to necessary to redefine several roles within the better leverage multiple channels to market executive leadership team, with a series of and product niches. appointments made over the past year. MARK ADAMSON Secondly, a number of group businesses Francisco Irazusta was appointed to the role —Chief Executive Officer continue to offer attractive returns and of Chief Executive – Light Building Products. opportunities to organically grow earnings Francisco joined us from CRH plc where he from their existing asset base. Opportunities ran the European Building Products business have been identified to further develop and before this he held a variety of roles in supply chains, better leverage channels and global building products in both North customers, develop product and service America and Europe. innovation and drive efficiency. Matt Crockett was appointed to the role of Finally, businesses which are not meeting Chief Executive – Heavy Building Products. performance and financial targets will be Prior to joining Fletcher Building Matt was managed to return them to sustainable chief turnaround officer at Spark profitability, following which their long-term New Zealand, where he has been responsible position will be reassessed. for Spark’s turnaround programme focused on cost, capital and revenue improvement We will continue to look to divest those initiatives. businesses that are not core to our long-term future. Dean Fradgley, who was chief executive of Distribution New Zealand, has been appointed to head the newly combined Distribution division. 10 Fletcher Building Annual Review 2015
Overview—Heavy Building Products The benefits of diverse experience
“Our values immediately resonated with me. Play Fair is about being up front with each other, our colleagues, and doing what we say we will.”
MATT CROCKETT —Chief Executive – Heavy Building Products
OUR BUSINESS Humes – the largest pipeline and pipeline STRATEGIC PRIORITIES AND FOCUS Heavy Building Products comprises the systems supplier to New Zealand’s Heavy Building Products’ customer led following New Zealand and Australian infrastructure market. strategies continue to focus on: operating units: Iplex Pipelines – a leading manufacturer • developing winning customer value Winstone Aggregates – New Zealand’s and supplier of plastic pipeline systems propositions largest manufacturer and distributor of in New Zealand and Australia. Iplex • delivering superior product quality aggregates and sands to the roading, civil provides diverse products and systems to and service engineering, agricultural, landscaping and the water infrastructure, coal seam gas, • operational excellence to drive lowest cost drainage industries. irrigation, civil, telecommunications, electrical, rural and construction sectors. manufacture and distribution Rocla Quarry Products – has whole or partial • leveraging our integrated business model MARKET UPDATE interest in 19 quarries across Australia. It is the to maximise Fletcher Building value across New Zealand residential consents and country’s leading sands manufacturer and concrete and pipe value chains supplier to the building and construction building activity continued to grow above industries. long run trends, while civil infrastructure We will defend and grow our strong market activity was supported by strong and positions in New Zealand. We will also Golden Bay Cement – New Zealand’s largest ongoing government investment. develop a low-cost South Island cement manufacturer of cement for ready-mixed self-supply capability, following the end of the Much of the growth in the concrete market concrete producers, concrete product reciprocal supply arrangement with Holcim. manufacturers, building materials distributors, continued to be driven by activity in Auckland construction contractors and other major and Christchurch. There was a notable shift in In Australia, the focus is on turning around users of cement and concrete. the Christchurch market from residential to Iplex Pipelines’ performance and building a larger commercial projects. The competitive sustainable platform for future profitable Firth – one of New Zealand’s best known dynamics in all key New Zealand market growth. We also plan to improve Rocla and most trusted trade names, Firth is the regions were stable. Pipeline Products’ earnings growth trajectory largest and only national manufacturer through product innovation and While Australian residential construction offering New Zealanders a diverse and diversification into new market segments. complete range of concrete products, activity remained stable, other market systems and solutions. segments were very challenging. There was a marked reduction in private sector Rocla Pipeline Products – a leading investment in mining and resources. Australian supplier of manufactured concrete Government infrastructure spending was also infrastructure products to civil contractors, reduced, with increasing uncertainty over developers, local governments and other future spending intentions. authorities. 11 Fletcher Building Annual Review 2015
BEN HAWKINS —Hunua Quarry Manager 12 Fletcher Building Annual Review 2015
Overview—Light Building Products
Building our trusted brands
KARIKA TURUA —Tile Press Operator 13 Fletcher Building Annual Review 2015
Stramit Building Products – Australian manufacturer of roll-formed steel building “To me, Better Every products, including roof and wall cladding, Day should be about guttering, fascia, purlins, flooring and having the best people structural formwork. FY15 HIGHLIGHTS managing best processes Light Building Products had strong growth in supported by best the New Zealand plasterboard business this systems. The best asset year in line with building consent growth. There was significant turnaround in the a company has is its insulation businesses and there is a strong customers and the talent outlook following building consent increases in both New Zealand and Australia. The roof it employs to satisfy its tile businesses have had a challenging year customers!” with mixed markets across the globe.
FRANCISCO IRAZUSTA Product innovation has been successful —Chief Executive – Light Building Products with Fletcher Aluminium launching Smartfit®. This technology means windows and doors arrive on site, ready to be fitted immediately, which is proving to be a very OUR BUSINESS popular solution. Online tools developed to Light Building Products includes the enable customers to design and submit their manufacture and distribution of specific requirements have increased our plasterboard, insulation, coated steel and customer service offering. aluminium products. FY16 FOCUS Fletcher Aluminium – a New Zealand We need to grow our market share in a leading manufacturer of residential windows profitable and sustainable way. This can only and doors and commercial façades, be achieved by driving superior customer supplying the domestic and international value propositions through innovation in markets. products, systems and services. In essence, providing solutions. Dimond – New Zealand’s leading supplier of steel roofing, cladding, structural and We want to achieve a differentiated rainwater products. Dimond has ten sales customer experience with a flawless end centres across the country. to end journey. We continue to drive our manufacturing and supply chain excellence Roof Tile Group – includes Gerard Roofing programmes and further invest in our Systems (NZ/ Asia/ Europe) and DECRA people and the capability to achieve this. Roofing Systems (USA). Gerard is a world leader in the design, manufacture and A new sales and marketing excellence marketing of metal roof tiles. DECRA programme is being developed across all combines the performance of steel with the of Fletcher Building to further support the aesthetic beauty of tile, shale and shingle. business in delivering our ambitious objectives. At the Light Building Products Winstone Wallboards – New Zealand’s sole division we support our businesses to manufacturer and leading supplier of provide great service and tailor our offers to gypsum plasterboard. Approximately 75% of deliver great products and services in a cost its sales are in the residential sector, with the effective way. We aim to create increased remaining 25% in commercial construction. demand for our products through marketing Fletcher Insulation – an Australian leading strategies, targeted at our main customers insulation company, with manufacturing and market influencers. facilities in Melbourne and Sydney. The We will work with other Fletcher Building company’s brands include Pink® Batts® businesses to ensure we maximise insulation, Sisalation® foil and Permastop® opportunities to provide mutual customers building blanket. with a better offering. Our senior Tasman Insulation – started manufacturing management team is driving significant in New Zealand in 1961, and manufactures strategic and process change, while our the iconic Pink® Batts® brand of insulation. core frontline and operational people continue to deliver quality product. We are Tasman Sinkware – Australia’s only sink focused on ensuring we have the best manufacturer, proudly supplying the people and right structure to be customer Australia, New Zealand, USA, Hong Kong and leading and deliver value for our customers Singapore markets. and shareholders. 14 Fletcher Building Annual Review 2015
Overview—Laminates & Panels
OUR BUSINESS Laminates & Panels division is made up of: qualities aimed at addressing the growing trend in the healthcare and education sectors Formica – produces a range of laminate and as well as government projects with high surface products for both commercial and hygiene expectations. This segment is residential spaces. The business unit growing quickly in our Asian markets, manufactures its products in Europe, Asia, particularly China. and North America. In the decorative surfaces market, there is Laminex – the Australian and New Zealand a continuous emphasis on developing leader in decorative wood panels and products to ensure our ranges remain the laminate, particleboard, medium density preferred choice in the market. Our German fibreboard and other decorative products. metallic laminate business, Homapal, has BUSINESS FOCUS produced a range of innovative magnetic Laminates & Panels Laminates & Panels continues to pursue whiteboards which have proved very its strategy of growing the business through successful in the education and the development of new capabilities, commercial sectors. enhancements of existing systems and In August 2014 we completed a full upgrade processes, and our people capabilities. These of our North American computer systems. are all aimed at making it easier and better for This upgrade has had a positive impact our staff to perform their roles, while at the on our customer service as well as improving same time increasing the emphasis on 15MAJOR MANUFACTURING the efficiency within our operations, providing improved experiences and service SITES ACROSS THE WORLD particularly warehousing. for our customers and end users. This ensures the business remains at the forefront of a FY16 FOCUS highly competitive and cost conscious market. During FY16, we are focused on making technology investment and system Laminates & Panels continued its programme “Our teams strive to be improvements across the business, of manufacturing and supply chain particularly to our European businesses better every day, ensuring excellence at its 15 major manufacturing sites where we are currently installing a new ERP across the world. This has seen investments we are first choice for system. With consumers carrying out the in new equipment such as a state of the art majority of their pre purchase research online, our customers through melamine treater in our Montreal, Canada our Australian business has the largest social plant. At our other key manufacturing sites service excellence and media presence in the decorative services we are focused on improving performance industry in the Asia Pacific region. We will quality of product.” and efficiencies. continue to build upon and improve focus PAUL ZUCKERMAN A key strategy of the Laminex Australia and capability across social media platforms. Chief Executive – Laminates & Panels — business is to expand its sales activities and Further focus areas include successful product portfolio to better penetrate the delivery of revenue initiatives, optimising our commercial building sector, without losing its distribution networks, pursuing global and traditionally strong position in residential new product developments, as well as cabinet joinery markets. During the year the improving service and connectivity to business launched Clipwall – a revolutionary our customers. wall lining system allowing quick installation of decorative panels without the time consuming finishing processes such as painting. This system has been specified and installed into high profile spaces, including an international hotel chain and a leading Australian bank.
In Asia our business has successfully developed new products with antimicrobial
A passion for EXCELLENCE 15 Fletcher Building Annual Review 2015
JEFFERSON SCHWENCKE —Production Operator
EXCELLENCE Customer
First 16 Fletcher Building Annual Review 2015
Overview—Distribution
“The diversity of our people and product offerings enables us to deliver superior service for a fair price, while ensuring the customer is at the heart of everything we do”.
DEAN FRADGLEY —Chief Executive – Distribution
RAVI JETHVA —Drive Thru Team Member CUSTOMER FIRST
DISTRIBUTION NEW ZEALAND
OUR BUSINESS BUSINESS FOCUS During FY15, the division also improved Distribution New Zealand comprises the To enable the delivery of superior returns, employee engagement scores to record following New Zealand based business units: Distribution New Zealand is focused on highs, promoting diversity and inclusiveness, increasing the share of spend from existing as well as significantly investing time and PlaceMakers – the largest business to and new customers through continuously resources into learning and development. business building materials supplier in improving customer service, having the best New Zealand with 60 locations across FY16 FOCUS people and leveraging the group’s preferred New Zealand. Distribution New Zealand will continue to suppliers. This focus enables Distribution grow organically while expanding further into New Zealand to drive increased revenue and Easysteel – New Zealand distributor, specialist categories such as: bathrooms, improving margins by buying better and processor and fabricator of steel and related kitchens, roofing, and heating, and launch making the cost base more efficient. products including Cyclone fencing and wire online omni-channel offerings to targeted products. With a passion for excellence and leading customer segments. Distribution Fletcher Reinforcing – supplies steel customer solutions, the division has extended New Zealand is also a key part of the group’s reinforcing, mesh, cutting and bending and its colocation programme of Mico and procurement initiatives, including leveraging on-site mesh placement services for concrete PlaceMakers stores, with a total of six stores the group’s recent investment in an Asian foundations and structures. operating under the one roof at 30 June 2015. sourcing office to provide the best products along with the best customer service. Pacific Coilcoaters – the pioneer of pre- Distribution New Zealand’s customer focus painted steel products in New Zealand under has also seen both Mico and PlaceMakers the product name of ColorCote®. stores launch customer service promises relating to product availability, collection and Mico – New Zealand plumbing distributor, delivery, in-bound calls and invoicing. With selling back of wall and front wall solutions this unrelenting focus and passion for across 55 locations. customers, PlaceMakers made a bold New Zealand Distribution also incorporates industry publication of its customer service Forman Building Systems, providing ceilings, scores during the year to reinforce that the walls and insulation products to the customer is at the heart of everything we do. construction industry. 17 Fletcher Building Annual Review 2015
DISTRIBUTION AUSTRALIA
OUR BUSINESS for single and multi-residential dwellings and STRATEGIC PRIORITIES AND OUTLOOK Distribution Australia operates the plumbing commercial buildings, which are key drivers Distribution Australia will bring together the merchant business Tradelink, which has over of demand for plumbing products. New turnaround and growth strategies into a 210 branches across Australia. During the South Wales remains the strongest driver of single transformation programme to unite the financial year, the divestment of Hudson new buildings growth. business and leverage the Fletcher Building Building Supplies was completed. HIGHLIGHTS group initiatives. Low-cost country sourced products will increasingly be managed via the In FY15, Tradelink delivered a second Tradelink has launched two significant Asia sourcing office. consecutive year of sales and profit own branded product ranges. The bathroom growth (3% and 36% respectively in and kitchen brand, Raymor, has been Tradelink will continue to advance its value local currency) from continuing and reinvigorated with new on-trend products as proposition to target customer segments expanding the successful programmes of well as value-priced essentials. The cross- through proven programme initiatives such as the previous year. The year also marked linked polyethylene (PEX) piping system, sales excellence, product and supplier range the transition from turnaround recovery Tradepex, was also launched and is exclusive negotiations and reviews, and customer to transformative growth. There is an to Tradelink. Tradepex systems have a range service and convenience improvements. established platform for solid market share of features and benefits that make it more Further transformative initiatives such as gain and consistent profitability. The business convenient and valuable to plumbers. Both branch format improvements and investment has a transformation strategy focused on product ranges are the culmination of several in new channels to market will be developed the largest segments of the Australian Tradelink programmes that are foundational and evaluated as part of planning for plumbing market, which will provide further to improving business performance: long-term sales and earnings growth. opportunities for growth. • growth of low-cost country sourced MARKET UPDATE product Tradelink The Australian plumbing products market has • improving the capability and capacity of grown and Tradelink has retained the market Tradelink’s supply chain share gains from FY14. Major cities have • the development of skills of the sales force provided strong growth in new housing, however these have been partially offset by • a branch network to engage our customers declines in regional areas exposed to the in new product ranges declining activity in the resources sector. The 210 BRANCHES ACROSS AUSTRALIA market outlook is modest, based on forecasts 18 Fletcher Building Annual Review 2015
Overview—Construction
“Our people are inspired by the range and scale of our projects. They take huge pride in delivering the most complex and challenging work successfully.”
GRAHAM DARLOW —Chief Executive – Construction
CHRISTCHURCH —Justice and Emergency Services Precinct 19 Fletcher Building Annual Review 2015
Working with ability and Agility
OUR BUSINESS University of Auckland Science Centre and NEW ZEALAND HOUSING The Construction division’s business the Regional Science and Innovation The past year has been good for Fletcher operations are leaders in commercial, Centre at the University of Canterbury Residential – launching a new brand, Fletcher infrastructure and residential construction in • Commercial buildings – new head office Living, that reflects what we do. Fletcher New Zealand and the South Pacific: buildings for Fonterra and Datacom in the Living has won some highly contested projects and grown turnover by 35%, with the Building + Interiors – constructs commercial, Wynyard development, and a major strong Auckland residential housing market retail, health, hospitality, education and expansion at Westgate Shopping Centre, supporting sales volumes and value for government buildings. Work undertaken Auckland residential homes construction prices. ranges widely in use and scale and includes The South Pacific business had record Margins remain strong, with operating both main structures and commercial fit-outs. revenue this year underpinned by two earnings growing by 35% to $66 million. As Infrastructure – delivers a wide range of projects in Papua New Guinea for the South current sites are being built out, further land construction projects across all sectors of the Pacific Games – the Taurama Aquatic Centre has been acquired for development and civil engineering, marine and industrial and the Sir John Guise Stadium. The large construction of homes and apartments. markets. scale Momi Bay Resort in Fiji is being Current land holdings will enable completed by a Fletcher team. development of over 1,800 homes. Major South Pacific – has permanent offices in FUTURE PIPELINE planning and consent processes are under Papua New Guinea, Fiji, American Samoa, During the year we have been awarded way in Auckland, including the Three Kings Samoa, Tonga, the Solomon Islands and contracts across New Zealand and the South Quarry, Oruarangi Road sites and Manukau Vanuatu. It undertakes projects for local and Pacific worth over $1.4 billion. Our backlog is and Peninsula golf courses. In Christchurch foreign governments, aid agencies, religious now $2.4 billion, with major projects won in we have reached agreement with the Crown organisations and commercial entities. the last year including: to build over 200 residential properties on the Fletcher Living – is one of New Zealand’s Awatea site and 180 on the Colombo and • the MHX Kirkbride Alliance improving most innovative residential developers and its Welles sites. After a robust procurement SH20A to Auckland Airport leading home builder, creating residential process, Fletcher Living was selected as the communities in Auckland and Christchurch. • Auckland International Airport terminal preferred partner for the East and North redevelopment Frame Residential Precinct development in Earthquake Recovery (EQR) – has been • Victoria University Gateway Building (K2), central Christchurch. This landmark project providing home repair services in Canterbury Wellington will house 2,200 people to create a vibrant since October 2010. new city neighbourhood across three distinct • Ministry of Education head office BUSINESS UPDATE precincts. redevelopment, Wellington The volume of work being carried out by all • National Biocontainment Lab, Wellington. The Construction division has a bold and business units within the division is at record strong outlook for the coming year. We levels. Total revenue was $1.6 billion, a 21% The outlook for the next year is positive, with continue to focus on areas of growth, our increase on last year. Commercial performance continuing high levels of central and local competitive advantage and operational has reflected this growth in business, with EBIT, government investment in transport and excellence. excluding significant items relating to the social infrastructure, the ongoing rebuild of restructure of Forman Contracting, at Christchurch and new large commercial Fletcher Living $140 million, a 32% increase on last year. building projects signalled in Auckland that Within New Zealand, we have completed or are being actively pursued. We are currently are delivering some very significant projects: also bidding on substantial roading infrastructure projects and future investment • Core transport infrastructure – Auckland- in this sector has recently been announced. % Manukau Eastern Transport Initiative, MacKays to Peka Peka on the Kapiti Coast, Fletcher EQR has been providing home repair Wellington and Waterview Tunnel Alliance, project management services for the INCREASE35 IN GROSS REVENUE WITH THE Earthquake Commission in Canterbury and Auckland STRONG AUCKLAND RESIDENTIAL HOUSING over 65,000 homes have been repaired • Key public sector assets – Auckland South MARKET SUPPORTING SALES VOLUMES under this agreement. A contract for work AND VALUE FOR RESIDENTIAL HOMES. Corrections Facility, Christchurch Justice beyond the initial contract expiry date of April and Emergency Services Precinct, the 2015 has been agreed, which provides for up to 12 months of further repair work. 20 Fletcher Building Annual Review 2015
What, why and how we work
MARK ADAMSON —Chief Executive Officer
We need a diverse team of talented, high-quality employees if we are to achieve our ambition of being in the top quartile of Australasian companies for shareholder value creation.
DIVERSITY DELIVERS In the past, 80% of a company’s value was determined by physical assets such as manufacturing plants and buildings. Now it’s generally accepted that 80% of a company’s value is determined by the quality and commitment of its people.
We all have unconscious biases about different groups of people. If you want to run a successful business you need to learn how to overcome these biases. If you let stereotypes influence your hiring practices and are reluctant to hire women for example, then instantly the talent pool is reduced by 50%. If you favour white men, then the talent pool is further reduced to the point where it becomes impossible to argue you are getting the best person for the job and impossible for a chief executive to argue he or she is doing a good job. Diversity in the Diversity MAKING 21 Fletcher Building Annual Review 2015
%
73INCREASE IN THE NUMBER OF WOMEN IN SENIOR LEADERSHIP ROLES, SINCE 2012
organisation to assist with their aspirations to develop women leaders and bring the % economic, productivity and market responsiveness benefits to the New Zealand Pania economy that gender balance brings. Our innovative leadership development programmes are internationally recognised and we have launched a range of “Before Fletcher Building I was at 50OF OUR AUSTRALIAN OPERATIONAL GENERAL MANAGER ROLES development opportunities for female Limited Service Volunteer six week NOW HELD BY WOMEN leaders across all levels of the business. boot camp. The best thing about working at Fletcher Building is that When I first arrived at Fletcher Building’s head office, I noticed there was limited it’s hard out! I’m a mould operator. ethnic diversity in senior management, It’s my first job and I’m loving it. Research shows diverse companies outpace The training has been good; if stuff homogeneous companies in terms of especially in terms of Māori and Pacifika goes wrong you have to learn on performance and productivity. My experience representation. The Māori and Pacifika the spot because you can’t repeat at Fletcher Building over the past two years leaders we do have are excellent and I’m the same mistake over and over. It reflects this trend. In the businesses where pleased we are developing initiatives to normally takes six months to get a we have increased the number of women encourage more cultural diversity in our certificate but it took me just one. My employees, we have seen real productivity business. We are also partnering with gains. government agencies to provide typical day on the job is watching the opportunities to New Zealand youth to gain moulds. In my free time, outside of In just one example, our male concrete truck work skills and employment, especially work, I like fishing, diving and kicking drivers in Canterbury became more Māori and Pacific Islanders. back with family.” productive to keep pace with a newly- appointed female driver who made more Fear and shame have no place in a modern PANIA RIKA-HARDING deliveries each day than they did. Contrary to workplace. Employees should feel safe at —Production Operator, Steel Distribution a popular perception that women spend work and be comfortable enough to be true more time chatting, it was the men who did to themselves. We are currently being when they made their deliveries. audited by The Rainbow Tick, an The Limited Service Volunteer course organisation that offers New Zealand’s only is an intensive six-week motivational We’ve also seen increased employee programme for certifying organisations as and training programme run by the engagement at one of our steel production safe and welcoming places for lesbian, gay, New Zealand Defence Force on plants after they hired their first female bisexual, transgender and intersex behalf of Work and Income. It is employee. Notably, she completed her six employees. We hope to be New Zealand’s aimed at unemployed youth aged month training certification in just one month next leading corporate to achieve 17-25 who want to turn their lives which had never been achieved before. certification. around. The course is designed to We have been involved in a number of By creating a diverse and inclusive work improve candidates’ job prospects, initiatives to improve diversity at Fletcher environment, Fletcher Building will ensure it increase their self-confidence and Building but we believe there is more to do. keeps attracting high-quality employees boost their communication and leadership skills through hands-on DIVERSITY AT FLETCHER BUILDING whatever their gender, ethnicity or sexuality. It is the combined power of our 19,000+ physical activities, workshops and We have increased the number of women in employees that will help us achieve our lectures that all take place in a senior leadership roles by 73% since 2012 and business goals and deliver shareholder military setting. So far this year, 50% of our Australian operational general value. Diversity delivers for the bottom line. 15 LSV trainees have been employed managers are now women. We’ve become a in different areas of Fletcher Building. Principal Partner with the Global Women 22 Fletcher Building Annual Review 2015
Executive Team
Building a better business
An experienced and expert team leading Fletcher Building from the front.
MORE INFORMATION ONLINE AT FLETCHERBUILDING.COM/ABOUT-US/EXECUTIVE-MANAGEMENT
MARK ADAMSON GERRY BOLLMAN Chief Executive Officer and Managing Director Chief Financial Officer
CHARLES BOLT KATE DALY Company Secretary and General Counsel Chief People and Communications Officer 23 Fletcher Building Annual Review 2015
MATT CROCKETT GRAHAM DARLOW Chief Executive – Heavy Building Products Chief Executive – Construction
DEAN FRADGLEY FRANCISCO IRAZUSTA Chief Executive – Distribution Chief Executive – Light Building Products
PAUL ZUCKERMAN Chief Executive – Laminates & Panels 24 Fletcher Building Annual Review 2015
Strategy Building value
Fletcher Building’s commitment FLETCHER BUILDING STRATEGIC FRAMEWORK is to create sustainable value for our shareholders. That means delivering reliable earnings growth and improving our capital Our commitment to our shareholders returns and cash generation. Increase the value of How are we bringing this Fletcher Building commitment to life in our Support business? How we make from an things happen Active Business Centre Group We are making things happen at Unit Portfolio Strategy Management three levels of our organisation:
Our strategic • – Fletcher Building is a Business Units priorities diverse portfolio of over 25 business Customers People Efficiency Profitable units. They are our earnings engine Growth and they own the customer relationships. Every business unit has a clear strategy to win in its markets. Our core values • Support from an Active Centre – we Better Customer Be Bold Play Fair are leveraging the scale of Fletcher Every Day Leading Building to invest in capability that can support the business units in the effective execution of their strategies. Our vision • Group Portfolio Management – we Building Better, Together have a clear view of where we will make our major growth investments and how we will shape the portfolio through divestment and acquisition over the medium term. THE ACTIVE CENTRE
CENTRAL FUNCTIONS CUSTOMER • Finance • Human Resources • Legal • Group Technology • Procurement • Property • Communications • Shared Services Thanks!
Leverage scale BUSINESS Common, efficient practices UNITS
Customer Leading CENTRES OF EXCELLENCE Performance
• Manufacturing • Supply Chain • Sales & Marketing • Strategy • Health & Safety
Leverage scale Enabling improved performance 25 Fletcher Building Annual Review 2015
Fletcher Building has four strategic priorities that are being executed across these three levels of the organisation.
1— People 3—Efficiency 4—Profitable Growth We are making Fletcher Building a great Across Fletcher Building, we are working This means investing where we can win. place to work. This means going home better together. This means using our In the past two years we have conducted safe every day, building leadership and scale and expertise to improve the a full portfolio review to ensure we capability and creating an engaged, effectiveness of our operations and drive are focusing our capital in the parts of high-performance workforce across the down costs. As an example, our efforts in our business that have the greatest entire business. procurement, property and shared competitive advantage and earnings services have delivered $50 million in potential. Our major investments will 2 Customers — benefits (net of costs) in the period come in Residential, Construction and We are focused on delivering what our FY13-FY15. We anticipate these Distribution, where we believe we have: customers value. That means constantly programmes will deliver a further creating better products, services and (i) differentiated capabilities, cost positions $50 million over the next two years. solutions. An example of this is Stramit’s and customer relationships; shed design application. Customers (ii) material room for growth. can design their own sheds to fit their specific needs. Elsewhere in the portfolio, we will continue to invest to optimise our businesses as we are doing, for example, to build out our cement supply chain in New Zealand.
We will also ensure there is capital discipline, including in the management of working capital.
THE FLETCHER BUILDING PORTFOLIO OF BUSINESSES NZ AU Rest of World
Manufacture and supply Merchant distribution Construction
RAW MATERIAL SUPPLY TO END EXTRACTION PRIMARY SECONDARY USERS & & PROCESSING PROCESSING PROCESSING INSTALLATION
Concrete: Ready-Mix, Rocla Quarries Masonry , Dri. Winstone Golden Bay Firth Concrete Pipes Aggregates Cement Humes Humes & Products Rocla Pipes Iplex AU Tradelink Plastic Pipes Iplex NZ Mico and Humes Reinforcing & Fletcher Reinforcing Fletcher Living Easysteel Special Steel Easysteel Building + Interiors Pacific Coilcoaters Dimond Roofing Coated Steel Stramit Tradelink PlaceMakers South Pacific Roof Tile Group Aluminium Fletcher Aluminium Infrastructure
Sinkware Tasman Sinkware Tradelink EQR Tasman Insulation Insulation Fletcher Insulation Tradelink Plasterboard Winstone Wallboards Laminex AU Laminex AU Laminates & Panels Laminex NZ Laminex NZ Formica 26 Fletcher Building Annual Review 2015
Vision and values Building Better, Together.
“In a short space of Be Bold. Better time, the vision and Every Day. values programme has Courageous leaders Progressive become a unifying force Problem solvers Continuous improvement Backing ourselves A passion for excellence for positive business Have a go without being rash Champion of safety transformation.”
KATE DALY Customer Play Fair. —Chief People and Communications Officer Leading. Expert partner Transparent Creative Honest Insightful Fair minded Building for a greater good Respectful and inclusive
Underpinning all of our efforts Better Every Day is about seizing are our vision and values. They opportunities to improve regardless of create a shared sense of what it how big or small. means to be Fletcher Building and Be Bold is about enhancing our ability to alignment around a common innovate and take calculated risks to drive a purpose and way of working. growing business for our shareholders, They are the foundation on which customers, communities and employees. our strategy rests. Without customers and clients, we don’t have a business – it’s as simple as that. The launch in 2015 engaged more than 19,000 employees in over 40 countries Customer Leading is not just about being including 5,000 without computer access. customer-focused, it’s about being ahead of “The vision and values rollout in Asia With a focus on engagement and story-telling, the game for our customers, every single day. has started full of joy. We have watched people connect across Fletcher the vision and values launch has become a Play Fair is about being honest and respectful Building, from all over the world. rallying cry for transformation from the board in our relationships with our fellow employees, The best part is, we are not just and senior executives to the factory floor. customers and communities. watching things happen, we are Employees now feel more connected to the making them happen!” organisation, our vision and our future success. The values are embedded in PAULINE HUANG everyday processes and are guiding Fletcher —Human Resource Development Building’s transformation to becoming a Manager Asia : VISION AND VALUES CHAMPION collaborative, customer leading organisation. Our vision of Building Better, Together and our values are becoming part of our DNA. 27 Fletcher Building Annual Review 2015
AUCKLAND —Waterview Connection 28 Fletcher Building Annual Review 2015
People & Community The collective strength of our 19,000+ people
LYNNE MAKEPEACE —Project Manager 29 Fletcher Building Annual Review 2015
Our people strategy is built around expanded from Australasia to include our four pillars – organisational design, global business with great success. “Employee engagement leadership, talent and culture. We also delivered a learning curriculum to over 7,000 employees globally. has a direct impact Over the past year, we have simplified our structure to focus on our customers, We have also increased our focus on building on how we perform – continued to invest in building leadership a deeper pipeline of diverse talent for internal engaged employees competency, developed strong pipelines of recruitment. Our focus on talent regeneration talent and created a high performance and has created a strong succession pool of care more, perform high engagement culture. To harness the candidates to fill critical leadership roles collective strength of over 19,000 employees across the group. better and stay longer.” to drive business performance and Diversity KATE DALY productivity, we have defined our vision and We have established a Diversity Council —Chief People and Communications Officer values, and increased the focus on two way which is chaired by our chief executive communication across the group. officer, to ensure that we drive continued The awards received this year highlight the improvements. Our diversity strategy is company’s achievement in human resource focused on three key areas: practice. Awards include Silver at the Global 1. Developing a strong pipeline of diverse Leadership 500 awards for our Step Up talent Leadership programme and five Human Resource Institute New Zealand Awards 2015 2. Working with community and government – Supreme Award, Specialist of the Year, organisations to provide employment Person of the Year, Talent Management opportunities to youth Initiative and Innovation. 3. Creating an inclusive work environment Leadership strength for all our employees. Fletcher Building’s leadership programmes Women in leadership has been a specific focus on developing capability to support our focus over the past three years. Since 2012, business strategy. Our objective was to create there has been a 73% increase in female a world class leadership framework, and we leaders at general manager level. Our are delighted that the quality and innovative female leaders have access to specific design has been recognised around the development opportunities, mentoring, world. In 2015, our leadership programmes and networking events.
2015 2014 2013 2012 Learning Curriculum – 2015 WOMEN MEN WOMEN MEN WOMEN MEN WOMEN MEN AVAILABLE IN 11 Board of directors 2 (29%) 5 (71%) 2 (22%) 7 (78%) 25% 75% 22% 78% LANGUAGES, DELIVERED Executive committee 1 (11%) 8 (89%) 1 (9%) 10 (91%) 11% 89% 11% 89% TO AROUND 7,000 EMPLOYEES ACROSS 1 19 (25%) 58 (75%) 20 (24%) 65 (76%) 16% 84% 14% 86% Senior management ALL LEVELS OF THE All employees2 19% 81% 21% 79% 22% 78% BUSINESS GLOBALLY. 1. Senior management for these purposes includes any person who reports to a member of the executive committee 11 2. Historical information not available across all employees 30 Fletcher Building Annual Review 2015
People & Community
In 2014 we signed a principal partnership with Technology enablement Stramit sponsorship of Global Women and we are strong supporters Information Technology (IT) and the People Surf Life Saving Australia of the organisation and its breakthrough and Communications functions have worked Stramit Building Products has been a proud leaders programme. together to enhance business performance supporter of Surf Life Saving NSW for over through two new technology platforms. nine years. The Stramit NSW Surf Life Saving To ensure we have a more ethnically diverse Workday, launched in September 2014, is a Country Championships sees more than pipeline, Fletcher Building is also partnering global human resource management tool 1,200 people compete for over 3,000 with Diverse Inc New Zealand and other that enables improvements and efficiencies spectators annually. Stramit supports the organisations to bring greater focus on to our human resource processes and data work done by surf lifesavers all over Australia developing stronger career pathways for management. and its support ensures the Country Māori and Pacifika leaders. Championships continue to be a highlight on Matrix, our global intranet, launched in Our youth employment strategy helped over the annual surf sports calendar. November 2014, connects our people around 200 young New Zealanders into work to date. the world on one platform, delivers trusted City impact We continue to partner with Ministry of Social information and enables greater collaboration Fletcher Building is proud of its 80 year Development, New Zealand Defence Force, and engagement between businesses. history in Christchurch. As well as rebuilding Auckland Council and First Foundation to Christchurch physically, we support the soul provide training and opportunities for young of the city through sponsorship and people to enter the workforce. COMMUNITY community initiatives. Current investment We have applied for the Rainbow Tick At Fletcher Building we enjoy includes the Christchurch Arts Centre, accreditation, which will identify Fletcher supporting the communities in University of Canterbury Quake Centre, Building as an inclusive employer. We have Champion Canterbury Awards, Christchurch which we operate and the people started a lesbian, gay, bisexual, transgender Arts Festival and Crusaders Rugby Team. who call those communities home. and intersex support group to develop Supporting people with disabilities initiatives and programmes to drive greater We act honestly, in good faith and in For 28 years, Formica North America Canada inclusiveness across Fletcher Building. the best interests of Fletcher has partnered with Les Ateliers from Building, to ensure that all Fletcher Building has a diversity policy, which Saint-Jean-sur-Richelieu to help people with is available on the company’s website. The stakeholders are treated fairly. physical or mental disabilities to join the remuneration committee reviews progress workforce. Adapting to the skills and abilities, Fletcher Building’s sponsorship ranges from against diversity objectives and initiatives each worker gains autonomy and environmental initiatives to educational developed by the group to deliver outcomes responsibility. Formica has employed 60 staff institutions, sports and industry events. Our against the diversity policy. The board is from Les Ateliers, who assemble high business units also implement their own local satisfied with the initiatives being pressure laminate samples and chain sets. community initiatives. implemented by the company and its performance with respect to the diversity policy. PlaceMakers is proud to be the main sponsor of The Prostate Cancer FBuSay Foundation of New Zealand FBuSay, our annual employee engagement For seven years, PlaceMakers has helped give survey, available in 15 languages, was voice to the message that encourages completed by over 18,000 staff (90%). All key New Zealand’s men stay healthy and to ‘get engagement indicators increased this year. checked’ for prostate cancer. All leaders at Fletcher Building have engagement targets set annually, and PlaceMakers stores throughout the country engagment is measured as part of their short are busy all Blue September raising money term incentive scheme. with a myriad of fundraising events. To date, PlaceMakers has raised well over $1.5 million for research and public education 2015 2014 % programmes. Engagement 67% 63% +4% International Disaster Relief Leadership 64% 60% +4% When Cyclone Pam left the South Pacific island of Vanuatu devastated in March Strategy 72% 67% +5% Fletcher Building was quick to respond. Word Performance went out across the organisation and we had management 67% 64% +3% building supplies shipped to the South Pacific Change Island. expectation 49% 41% +8% 31 Fletcher Building Annual Review 2015
STIRLING NORWOOD FINISHING STRONGLY AT THE STRAMIT SURF LIFESAVING COMPETITION 32 Fletcher Building Annual Review 2015
Sustainability Protecting our people and our environment
The health and safety of our people PROTECTING OUR PEOPLE Despite the group’s continued investment and protecting our environment are Managing and increasing our focus on health and progress, serious injuries still occur. important values for Fletcher and safety hazards that could result in serious During the last year 22 employees and contractors suffered serious injuries. We take Building, with a specific focus on injuries or fatalities is important to us – no result is more important than achieving it this matter seriously and therefore addressing being better every day. safely. One of our top safety priorities remains areas of risk within our business is a high the effective management of the risk of fires priority to us. Work at height, vehicles, and explosions in our large, high temperature material handling, mobile equipment and HOW ENVIRONMENT, SUSTAINABILITY, HEALTH AND SAFETY ARE MANAGED AT manufacturing processes. To manage this fixed plant and equipment have been FLETCHER BUILDING risk, we run programmes that improve recognised as significant hazards. The Being a responsible business underpins our competencies and management systems business has been investing in improved risk strategy and drives our environmental, and have incorporated process safety into management tools, development of sustainability, health and safety decisions that our assurance programme. standards and competency of supervisory are developed by our executive Environment, teams to drive a reduction in risk. Over the last year our recordable rates of Health and Safety (EHS) Council, chaired by reportable injuries have plateaued with a DEVELOPING OUR the chief executive officer. Across the SUSTAINABILITY FRAMEWORK focused priority of addressing our actual and business, individual managers take potential critical risks. Improved analysis is The group is in the process of building its responsibility and implement proactive providing greater depth of knowledge about sustainability strategy which is aligned to our initiatives to reduce risk and utilise risks within our business, where priority of business objectives and is focused on opportunities in environment, sustainability, action is required and focus areas to drive in addressing our key sustainability issues. A key health and safety as part of their business FY16. At a higher level, we continue to report part of this is to provide greater management objectives. These are key components of our our 12 month rolling average TRIFR per million of our sustainability risks and how they can managers’ personal performance. employee and contractor hours, with total be integrated into the business risk management process. Employees have been The board has oversight of this part of the injuries being the sum of lost time and engaged in workshops to identify material business, with a special subcommittee medical treatment injuries. In the last year this risks and opportunities and to build an dedicated to environmental, sustainability, rate has risen for the first time in the last five understanding of the level of impact of these health and safety governance. An EHS years from 6.0 to 6.4. In June 2005 this rate on our stakeholders and Fletcher Building. external assurance programme was was over 60. Our lost time injury frequency There are a number of important emerging introduced in FY15 with findings reported rate has also risen from 2.52 to 3.05 (from issues for stakeholders that have also been through to the board. The board is satisfied over 10 in June 2005). identified through this process which could with the initiatives being implemented by the impact the business. Strategies to manage company and its performance with respect to Fletcher Building Total Recordable Injury these are being put in place and will be the sustainability policy. Frequency Rate regularly monitored. .0
14 Social sustainability opportunities include focusing on the quality and consistency of
.1 health and safety controls for high risks, 11 embedding our talent and retention programmes and building communities 5
8. where we work. In FY16 there will be an
8 increased focus on occupational illness/ 4 6. 0 6. disease risks and environmental impacts 6. across the business, while the ‘Operations Excellence’ programme continues to drive efficiencies in energy, water and waste to improve our environmental sustainability. Sustainable value for shareholders earnings FY10 FY11 FY12 FY13 FY14 FY15 growth and a focus on business ethics underpin our value to play fair and drive Total Recordable Injury Frequency Rate economic sustainability. 33 Fletcher Building Annual Review 2015
Health and safety excellence award winner Gary Lowthian (left) with Melle de Pater, 10ha Laminates & Panels OF PROTECTED LIZARD President, Europe. HABITAT ACROSS THE SITE Over the last year Fletcher Building has been recognised by Deloitte Top 200 for its excellence in governance.
By listening to, and working with our stakeholders – our people, customers and communities – we can achieve more. We operate within a complex stakeholder landscape involving multiple stakeholders with multiple objectives. Understanding their concerns is important to the GARY LOWTHIAN WINSTONE AGGREGATES HELPS development of our sustainability strategy. – ONE OF OUR SAFETY CHAMPIONS GECKOS MOVE HOUSE Given Fletcher Building’s diversity, there are multiple crossover points of engagement As North Shields internal vehicle In early July, 23 Ngahere geckos were with many of our stakeholders providing instructor for two years now, Gary has released on Mana Island, a scientific opportunities to increase the level of set his sights on improving standards in island reserve off the southwest coast coordination across the business. his area. With a passion for health and of the bottom of New Zealand’s North Going forward, by maximising the societal, safety, Gary looks at what can be done, Island. The geckos were discovered at environmental and economic benefits of not just the job he’s there to do. In the the Belmont Quarry site in Wellington our activities while also managing our short time he’s been in the role he has during an ecological survey undertaken impacts, we can create greater business totally changed the way the training is as part of the planning process to gain value; further strengthen trust with our carried out and massively improved council approvals to extend the quarry. stakeholders and improve the communities safety at North Shields. Gary’s efforts The geckos are classed as ‘at risk’ within which we work. won him the Safety Mate award at the according to the Department of annual Fletcher Building Excellence Conservation. The transfer of the Further information on sustainability Awards. geckos became part of Winstone initiatives can be found on the website. Aggregate’s quarry extension project Gary said, “It’s been great to win and and included a quarantine period at get the recognition. It’s given me a Wellington Zoo. huge boost. Health and safety is what I want to do in the future so this has Winstone Aggregates is also really motivated me to keep at it.” contributing to pest control and replanting in the adjoining Belmont Peter Martin, who nominated Forest Park, and protecting lizard Gary for the award said: habitat across 10 hectares of their land.
“Gary’s constantly looking for Belmont Quarry is one of three major safety improvements throughout aggregate suppliers in the Wellington the plant and has, himself, region, supplying about one third of expanded his role to include the Wellington region’s aggregate and racking safety and vehicle accident more than half of the regional demand investigations whilst also being the for high grade concrete aggregate. ‘doer’ behind numerous fork-lift Belmont Quarry staff recently received truck safety initiatives.” silver at the 2015 Mimico Environmental Excellence Awards. The Mimico PETER MARTIN Environmental Excellence awards —Manufacturing Business Process Lead – North Shields, U.K. recognise businesses in the industry that operate in an environmentally sustainable way and weave their environmental management matters into areas of their business, such as health and safety, community and tangata whenua relations. Built in 2015 We build all sorts of projects, big, small and in all sorts of places. This year we embarked on work that will keep us busy for years to come and we completed other projects that began some time back. In every case, we’re proud of what we’ve built together.