New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<ul><li>FBU has guided to 1H23 EBIT before significant items of NZ$360m, -15%vs. our expectation of NZ$423m and lowered FY23 EBIT guidance to NZ$800-855m (was NZ$855m+, ForBar NZ$837m).</li><li>Lower 1H and FY23 guidance both largely reflect lower sales volumes in the residential division, an area we had flagged as a concern due to the slower housing market and where sales rates as at Dec-22 were running -20% below management’s expectations</li><li>On a positive note, volumes in the core materials division were in line or slightly below 2H22 and price increases largely offset cost pressure resulting in EBIT margins +150bp to 8.9% with Australia delivering 5.3%.</li></ul>

FBU has guided to 1H23 EBIT before significant items of NZ$360m, -15%vs. our expectation of NZ$423m and lowered FY23 EBIT guidance to NZ$800-855m (was NZ$855m+, ForBar NZ$837m).Lower 1H and FY23 guidance both largely reflect lower sales volumes in the residential division, an area we had flagged as a concern due to the slower housing market and where sales rates as at Dec-22 were running -20% below management’s expectationsOn a positive note, volumes in the core materials division were in line or slightly below 2H22 and price increases largely offset cost pressure resulting in EBIT margins +150bp to 8.9% with Australia delivering 5.3%.

Fletcher Building (FBU): Disappointing 1H23 Guidance Driven by Low Residential Sales