Reuters logo
UPDATE 1-Fletcher Building posts better-than-expected H2 profit
August 21, 2012 / 10:34 PM / 5 years ago

UPDATE 1-Fletcher Building posts better-than-expected H2 profit

* H2 profits before one-offs NZ$158 mln -Reuters calculation

* Crane earnings support, sluggish AU/NZ markets weigh

* FY profits fall 35 pct, in line with company guidance

* Outlook uncertain, needs home markets recovery

WELLINGTON, Aug 22 (Reuters) - New Zealand’s Fletcher Building Ltd on Wednesday posted better-than-expected profits for the second half, but said it needed a marked improvement in Australian and New Zealand housing markets to lift future earnings.

Net profit before one-offs at the biggest building products firm in Australasia was NZ$158 million, according to Reuters calculations, down from NZ$193 million the year before.

Despite the fall, second-half profits were slightly higher than expectations for NZ$154 million, according to a Thomson Reuters poll of 10 analysts.

Net profit for the year to June 30 fell 35 percent to NZ$185 million ($150.3 million) from NZ$283 million a year earlier.

Profit before one-off and unusual items was NZ$317 million from NZ$359 million a year ago, slightly higher than market expectations for NZ$313 million, and in line with a guidance range of NZ$310 million-NZ$340 million reconfirmed by the company in June.

“Weak building activity in New Zealand coupled with a marked slowdown in residential and commercial construction in Australia have resulted in lower earnings being achieved,” outgoing Chief Executive Officer Jonathan Ling said in a statement.

He said ongoing disruption to rebuilding efforts in the Canterbury region, devastated by an earthquake in 2011, along with a slowdown in construction in Australia negatively impacted its businesses throughout the year.

Shares in Fletcher Building, which declared an unchanged dividend of 17 cents a share, fell 3.6 percent to NZ$6.42 in early trade.


The company gave no detailed guidance on future earnings but said markets were uncertain and volatile, with expectations of flat or subdued trading in the United States and Europe, but growth in Asia.

“A significant increase in earnings from the current level would require a marked improvement in residential and commercial construction levels, particularly in New Zealand and Australia,” Ling said.

Easing the blow from weak Australian and New Zealand markets was a rise in earnings in Fletcher’s concrete division, along with an increased contribution from Crane, an Australian plumbing supplies company acquired in 2011.

The company booked one-off charges for the year of NZ$132 million, including a NZ$74 million fall in the value of its insulation business in Australia, although Fletcher said it would keep the business.

It also took NZ$58 million of restructuring costs for its Laminex business and the closure of its Formica plant in Spain.

Fletcher Building has struggled in 2012 from weakness in the home building markets of New Zealand and Australia. While the New Zealand market has started to show signs of improvement in past months, Fletcher said Australia continues to struggle.

The company is spearheading reconstruction projects in the Canterbury region, and has said that reconstruction will begin in earnest in 2013.

$1=NZ$1.23 Reporting by Naomi Tajitsu; Editing by M.D. Golan

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below