Fletcher Building has booked an increased half-year after-tax
profit of $154 million - largely from New Zealand operations
- despite being undermined by foreign currency transactions
amounting to $131 million.
For its half-year to December, Canterbury's lead construction
contractor said total revenue for the group decreased 2% to
$4.273 billion and its operating earnings (earnings before
interest and tax/Ebit) of $281 million were $19 million, or
7%, higher than a year ago. Fletcher's after-tax profit was
up from $146 million a year ago to $154 million.
The result was below or softer than analyst expectations.
Fletcher shares were down 3.5% at $9.38, following the
announcement, which included a dividend increase from 17c to
Australian operations are the problem child. New Zealand
residential in general and Canterbury's rebuild were the
Fletcher Building chief executive Mark Adamson said the
improved result was driven by more increased activity levels
across most New Zealand sectors and improved conditions in
the US, as well as early benefits from company restructuring.
''In New Zealand, where residential housing consents have
recovered to levels last seen in 2008, the continued
improvement in house-building activity is expected to
underpin trading results for the rest of the year, with
additional activity driven by rebuilding work in
Canterbury,'' he said in a statement yesterday.
Adjusting for the adverse effects of foreign currency
translation, operating earnings would have been up $32
million or 13% in the period, while similarly for total
revenue, again adjusting for foreign exchange effects,
revenue would have been $99 million higher, up 2%.
Craigs Investment Partners broker Peter McIntyre said the
profit was ''below expectations'', but full-year guidance for
Ebit, of $610 million to $650 million, was unchanged.
''In New Zealand, housing, Christchurch's rebuild, commercial
and civil construction are all expected improve during the
''Housing improvement is expected in Australia, but
commercial construction and mining investment is expected to
be subdued,'' Mr McIntyre said.
Forsyth Barr broker Andrew Rooney said the result was
''softer'' than expected, and while Ebit overall was up 7% at
$281 million on a year ago, ''Australia remains a key
challenge for management''.
''While conditions are buoyant in New Zealand and momentum
continues to build, the company refers to an uncertain
outlook in Australia,'' Mr Rooney said.
He said the full-year Ebit result was now under pressure, and
while he was ''bullish'' on New Zealand work, the Australian
first-half performance was a concern, particularly as profit
Mr Adamson said sales volumes were mixed across most of
Fletcher's Australian businesses.