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FIRST CUT: Fletcher 1H profit rises 2%

Wednesday 22nd February 2017

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Fletcher Building posted a 2 percent gain in first-half profit, missing some estimates, after taking a charge against a construction project and costs to close sites.

Net profit was $176 million in the six months ended Dec. 31, from $172 million a year earlier, the Auckland-based company said in a statement. Sales rose 4 percent to $4.61 billion. Excluding one-time items, profit rose to $187 million from $159 million and both sales and normalised profit were below the forecasts from brokerage Forsyth Barr.

Fletcher's building products division, its largest business, had a 12 percent decline in revenue while operating earnings dropped 20 percent including $15 million of costs for the closure of Rocla Products and Fletcher Insulation sites, and reflecting lower sales after the divestment of Pacific Steel and Rocla. Operating earnings from construction fell 33 percent, which it said reflected "losses on a major project".

Operating earnings from distribution and international activities both rose more than 30 percent and the company reiterated its guidance for full-year earnings before interest, tax and significant items in a range of $720 million to $760 million. It declared a first-half dividend of 20 cents a share, fully imputed, up 5 percent from a year earlier. Forsyth Barr was expecting a dividend of 21 cents.

Fletcher's shares last traded at $10.21 and have surged 54 percent in the past 12 months, outpacing the S&P/NZX 50 Index's 16 percent gain.

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