Momentum in Christchurch's reconstruction has underpinned a
full-year result for Fletcher Building slightly above
brokers' expectations, but work in Australia and the United
States remains sluggish.
For the year ended June, Fletcher booked a 4% decline in
total operating revenue, from $8.83 billion to $8.51 billion,
but with after-tax profit up 76%, from $185 million a year
ago to $326 million. Last year's result was hit by charges.
Fletcher shares had traded as low as $8.18 earlier in the
week but, following yesterday's result, were up about 6% at
$8.72. A final dividend of 17c per share took the year's
dividend to 34c.
Craigs Investment Partners broker Peter McIntyre said the
result was ''slightly ahead of expectations'' and, while not
the historical Fletcher ''over-delivery'', should be giving
confidence to investors.
''Investors can see through [weakened] 2013 into 2014 and
2015, where work is looking more positive. Fletcher's $75
million to $100 million restructuring, over the next three
years, is another positive,'' he said.
Forsyth Barr broker Peter Young said there were ''few
surprises'' in individual divisional results and earnings
before interest and tax (ebit) at $569 million were in line
with the brokers' and analysts' forecasts.
''The New Zealand business continues to benefit from a
sustained improvement in trading conditions,'' Mr Young said.
However, Australia remained ''weak'', with a 22% decline in
He said that during 2014, while New Zealand work would have
''positive momentum'', Australian housing would ''weigh
heavy'' on forecasts, the United States and Asian work would
remain ''mixed'' and Europe ''suppressed''.
Fletcher's chief executive, Mark Adamson, said the result was
driven ''by a sustained improvement in trading conditions in
New Zealand'', but that was offset by weak Australian
''In New Zealand, our operating earnings before significant
items increased by 38%.
This was driven by rising levels of new house-building
activity and strong momentum with the repairs and rebuilding
work in Canterbury,'' he said in a statement.
Australian conditions deteriorated early in the year and
continued to be soft, with weak residential and commercial
markets and a slowdown in mining and resources investment
having a knock-on effect across the construction industry.
''Consequently, operating earnings before significant items
from our Australian businesses fell by 22%,'' he said.