Fletcher Building sees FY earnings $650M-$690M on second-half rebound

Tuesday 21st October 2014

Fletcher Building, the biggest company on the NZX 50 Index, is forecasting a gain in full-year operating earnings of as much as 11 percent, driven by anticipated recovery in the second half.

Earnings before interest, tax and significant items are expected to be in the range of $650 million to $690 million, departing chairman Ralph Waters said in his final address to shareholders. That would be up from $624 million in the 2014 year.

With three months of the year completed, Waters said earnings in the first half would be broadly flat, reflecting "weak demand for coal seam gas pipes and lower volumes in the steel roll-forming and concrete products businesses" that offset growth in New Zealand earnings and a "stable" contribution from the rest of the world.

"In New Zealand, we have seen continued volume growth and improved trading results, although there has been some variability in performance month by month," Waters told shareholders at their meeting in Auckland. "Conditions in Australia have continued to be mixed, with residential volumes improving but weak demand across the infrastructure, mining and commercial sectors."

Strong activity levels in New Zealand in 2014 would continue into 2015, with continued high levels of building consents and "a very strong construction backlog of $1.8 billion, consisting of a number of large infrastructure projects... the prospects for both the commercial and infrastructure construction sectors are excellent."

In Australia, Fletcher expects continued improvement in those businesses exposed to residential building, and some of the benefits of restructuring in its Laminex and Tradelink businesses. The non-residential outlook "is less positive, with declining private sector mining investment and relatively low levels of budgeted government expenditure on core road and rail infrastructure projects, at least for the next 12 months. We do not expect to see a marked improvement in commercial construction activity."

Shares of Fletcher increased 0.1 percent to $8.67 and have gained 1.8 percent this year.

BusinessDesk.co.nz

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