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FIRST CUT: Fletcher betters first-half guidance with 8% ebit drop

Wednesday 20th February 2019

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Fletcher Building posted a first-half net profit following last year’s multi-million loss but operating earnings before one-offs were down 8 percent.

That’s better than the 10 percent drop the company warned of at its annual shareholders’ meeting last November.

Net profit in the six months ended December was $89 million compared to the $273 million net loss it reported for the same six months a year earlier.

Earnings before interest and tax were $285 million in the latest six months compared with $309 million in the year-earlier period before losses from its high-rise-building unit, Building + Interiors. Those losses dragged the year-earlier result to a $322 million ebit loss.

Fletcher now expects full-year ebit, before one-offs and assuming a full year of earnings from Formica, will come in around $650-700 million, a $20 million lift from its November guidance. The company says that reflects the treatment of the Formica business as “held for sale” so there was no need to depreciate its assets.

The US$840 million sale of Formica was announced in December.

“Our operating results across our core New Zealand businesses have been solid in the first half and we are on track to close out the B+I projects within the current provisions,” chief executive Ross Taylor says in a statement.

“In Australia, we have been impacted by the sharp decline in the residential market as well as higher input costs. We are focused on setting the Australian business up for improved performance from full-year 2020, which will include a reset of the cost base,” Taylor says.

As promised at the time the Formica sale was announced, Fletcher has resumed paying dividends with a first-half unfranked 8 cents per share first-half payout due on April 10.

Also as previously advised, full-year dividends will be weighted towards the final dividend.

Taylor says the company has made good progress on its strategy to refocus Fletcher on its core businesses in New Zealand and Australia.

(BusinessDesk)

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