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Australia’s largest home builder Metricon, which last year was mired in controversy for terminating fixed-price contracts on some of its builds, has bounced back to profitability in FY24 following a $75.7 million turnaround that is says has been driven by efficiency improvements across the sector.
The privately owned company, which normally keeps its financial data under wraps, has announced EBITDA of $42.2 million for the financial year.
The result is up from a $33.5 million EBITDA loss in FY23, a year when the building industry was hit by a wave of post-pandemic cost blowouts and materials shortages.
Metricon says the improvement in underlying profit, aided by a surge in deposits across its national portfolio, signals a “wider industry shift to a more positive future”.
“After weathering a tumultuous period, our recent results indicate a strong future is on the horizon for the housing construction industry,” says Metricon CEO Brad Duggan.
“The Australian housing construction industry is robust, and it is time to look at it more positively.
“With many Australians on the edge of their build decision, we hope these results will instil confidence in those on that journey that choosing to build now is a good decision.”
Metricon’s earnings announcement is seen as a move by the company to assure the market of its financial position after a tough period for the homebuilding sector that has led to several high-profile collapses, among them Porter Davis Group.
The Melbourne-headquartered Metricon, which is now reported to have about 1,600 employees and is supported by about 30,000 independent contractors, was forced to cut its workforce by 9 per cent in 2022 when its staff levels stood at 2,500.
The business also was given a $30 million cash injection that same year by its owners to strengthen the balance sheet.
Metricon attributes its earnings performance in FY24 to several factors, including “significant customer demand, improved building efficiency and the hard work and dedication of the Metricon team and its supplier partners”.
The company secured 5,279 deposits for new home builds during the year, up from 3,300 in FY23. The surge was led by metropolitan Victoria with a year-on-year increase from 1,554 to 2,330 and a doubling of deposits in Queensland from 706 to 1,443.
Metricon notes that building times have seen a “dramatic improvement in efficiency particularly in the last quarter, leading to an upturn in completed projects”.
Metricon settled 5,319 home builds in FY24, with the company revealing that many single storey homes were built in less than 100 business days.
The issues confronting the company last year over the cancellation of fixed-price contracts were compounded by delayed builds where original contracts had reached their 12-month expiry, triggering a renewal of pricing.
Metricon last year responded to the criticism by saying that a "small percentage of customers" who incurred delays in taking possession of their land titles or delays in building timelines beyond 12 months had led to "inevitable cost rises due to issues affecting building costs".
Duggan says the FY24 earnings result of Metricon has been buoyed by improved stability in labour costs along with “clever design” and improved relationships with premium suppliers.
“To engender trust in Australians looking to build their dream home, we have doubled down on strengthening our relationships with the best suppliers in the market to ensure we uphold the great design, quality and efficiency that we are known for,” he says.
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