Sharechat Logo

Fletcher Building to maintain dividends as profit tumbles

Wednesday 12th November 2008

Text too small?
Fletcher Building, New Zealand's largest construction company, said its financial strength should allow it to maintain dividend payments at 2008 levels even as profit slides as much as 38%.

Profit before one-time items will be between $289 million and $354 million in the year ending June 30, down from $467 million last year, Chairman Rod Deane told shareholders at their annual meeting in Auckland.

"Our geographical and portfolio diversification, coupled with a strong balance sheet, should serve us well in the coming year, and leave us well placed to continue to grow our business in the future," Deane said.

Fletcher paid dividends of 48.5 cents a share in 2008, a 7.8% increase on the previous year as the contribution from its Formica acquisition helped lift revenue. The company today said markets are "considerably tougher" than a year ago and it expects weaker earnings from building products, distribution and infrastructure projects.

The shares rose 2.3% to $5.73, providing a dividend yield of about 13% based on the past 12 months. From a peak of more than $12 in November 2007, the stock has sunk 53%, marking it as one of the worst performers in the NZX 50 Index, alongside children's clothing chain Pumpkin Patch and global positioning systems supplier Rakon.

In a presentation to shareholders today, the company argued that its shares have under-performed rivals in Australia including Boral, CSR and James Hardie. Fletcher is trading at just six times reported earnings, while Boral and CSR trade at 11 times.

Fletcher is rated a "buy" by seven analysts who follow the company, while three more rate it "outperform." The lowest rating is one of "hold."

By Jonathan Underhill



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Fletcher Building faces probe into plasterboard supply deals
Fletcher closes Christchurch plasterboard plant after finding asbestos
Fletcher Building names Charles Bolt as general counsel, replacing Farrell
Fletcher beats estimates with $326M FY profit as NZ revives, Australia stays flat
Fletcher executive Worley leaves as underperforming Crane unit brought in-house
Fletcher puts strategy under microscope seeking $70M annual gain, will shed jobs
Fletcher Building 1H profit edges up
Fletcher Building capital notes rollover at 5.4 percent from 8.9 percent
Fletcher Building offloads CSP Coating galvanised steel unit
Fletcher not abusing its role running Canterbury home repairs, EQC says