Fletcher to report

Fletcher Building, New Zealand's largest listed company, reports its half-year results today with New Zealand and Australia's economies at the forefront of analysts' scrutiny.

With its earnings out of Australia high, and being lead contractor in the overall $40 billion rebuild in Canterbury, Fletcher's year ahead will be signposted by construction growth indicators.

Forsyth Barr broker Andrew Rooney expected Fletcher to report a 21% increase in underlying earnings before interest and tax, (ebit) up at $316 million, driven by sustained business momentum in New Zealand.

''Sustained growth in domestic activity levels will drive group profitability again,'' he said.

In Australia, the building industry was enjoying a cyclical upswing, but the structural shift to building apartments or multi-family dwellings meant approvals for detached residential homes was only slowly ''grinding higher at best''.

This week, Fletcher announced it intended to sell its Pacific Steel business to Bluescope Steel for $120 million, which was welcomed by brokers, given it was not a core Fletcher business.

Craigs Investment Partners broker Peter McIntyre said although Canterbury was expected to provide a lot of work during the next five years, construction data from Australia was showing more promise.

He expected strong growth, at ebit level, across all Fletcher's divisions, saying the expectation of a positive result had driven its shares up 9% during the past month, to trade around $9.70 yesterday.

simon.hartley@odt.co.nz

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