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Fletcher Building results 'quite stunning'

Wednesday 16th February 2011

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Most of Fletcher Building's half year results are "quite stunning," its chief executive says.

Jonathan Ling was speaking at a briefing in Auckland following the release of Fletcehr Building's half year results this morning.

Fletcher Building reported a 7.8% rise in half year net profit to $166 million, as high infrastructure work levels and good cost containment in New Zealand and the stronger Australian economy boosted earnings growth.

An interim dividend of 16c per share will be paid, compared to 14c last year.

"On balance, these are good results in very tough markets," Ling said.

The company was "significantly up" in four of the group's six divisions against a "difficult backdrop" of floods and a cyclone in Australia and earthquake aftershocks in Canterbury.

Total sales for the six months to the end of December were 2.2% higher than a year earlier at $3.47 billion as a result of increased volumes in many of the company's Australian businesses, notably in the laminates and panels, and steel products businesses.

Only insulation revenues fell significantly due to the withdrawal of the Australian Government insulation subsidy scheme.

Ling also said the company's acquisition of building and industrials company Crane Group was going "pretty much to plan".

It is offering one Fletcher Building share and A$3.43 for each Crane share.

Fletcher was just waiting on regulatory approval from the Commerce Commission, which it expected to receive next week.

Crane's board had given Fletcher its unanimous support, he added.

He said Crane Group had dodged much of the impact of the Australian floods and had received "relatively minor" damage.

When asked about future acquisitions the company had in its sights, Ling said it wouldn't consider anything else until Crane had been absorbed.

However, the company's long-term aim was to continue growing in Australia.

Fletcher's work in quake-ravaged Canterbury would "accelerate" in the second half of the year following months of preparation and disruption caused by thousands of aftershocks in the region.

The group's subsidiary Fletcher Construction is the project manager of the Canterbury rebuilding effort.

It had already set up eight project management hubs and planned to introduce four more in April.

"We've got to remember there's some 60,000-odd jobs to be done and that's going to take an enormous effort," he said.

Fletcher was conscious of a "building level of frustration" due to delays, but it was crucial to get a sound system in place before work began.

He said the damage wrought by the magnitude 7.1 earthquake in September and accompanying aftershocks was nothing compared to the "devastating and universal" damage Queensland received.

However, he said demand for materials such as piping and laminex and other building materials, as part of the rebuilding process in Australia, would stand Fletcher in good stead for its full year result.

Ling said Fletcher expected full year net earnings to be within the analysts' range of $313 million to $396 million.

In early afternoon trading, Fletcher Building shares were up 2c to $8.23.



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