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Daily ShareChat: Fletcher Building

By Jenny Ruth

Friday 30th April 2010

Text too small?
 Jenny Ruth

Fletcher Buildings' other businesses must be performing ahead of expectations since it still intends to meet previous guidance, despite lower earnings from its Australian insulation operations, says Craigs Investment Partners analyst David Oxley.

Fletcher said last week the termination of the Australian government's insulation program will lead to operating earnings from its Australian insulation business falling to $12 million for the year ending June 30 after they earned $23 million in the six months ended December 31. The forecast includes $18 million of one-off redundancy and inventory management costs.

Nevertheless, the company says its annual net profit will fall within analysts' expectations of between $278 million and $303 million.

Oxley has raised his forecast slightly from $293.5 million to $298.2 million as a result. "We have adjusted our forecasts to reflect a more robust near-term recovery in residential construction markets than we had forecast, particularly in New Zealand," he says.

Nevertheless, the lower insulation earnings has led him to cut his forecast net profit for the year ending June 30, 2011 from $377.8 million to $369.1 million.

"We believe Fletcher Building continues to offer high quality exposure to a generalised pick-up in economic activity and particularly to the recovery in residential construction markets that appears to be taking hold," he says.

 

BROKER CALL: hold.

 

 

 

 

 



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