(Reuters) -Construction materials maker Fletcher Building said on Wednesday its annual profit nearly halved and warned of a decline in overall sales in fiscal 2024 as rapid interest rate hikes impacted housing demand and prices.
Shares of the New Zealand-based company fell 4% to NZ$5.27 in early trading, the lowest level since June 29, after the company also declared a lower final dividend of 16 New Zealand cents per share compared with 22 cents a year earlier.
"A rapid increase in interest rates resulted in a material drop in buyer demand and an average circa 15% reduction in house prices," the country's largest construction materials maker said, adding that higher materials and labour costs further compressed its margins.
With interest rates anticipated to remain at high levels in the near term, Fletcher expects to see further tightening in its overall sales volumes in fiscal 2024.
It logged a net profit after tax of NZ$235 million ($139.87 million) for the year ended June 30, down from NZ$432 million a year earlier, mainly as it set aside NZ$255 million to cover rising costs from the construction of a convention centre in Auckland.
Analysts on average had estimated NZ$318.7 million in net profit, according to Refinitiv data.
($1 = 1.6801 New Zealand dollars)