Strong profit growth in New Zealand for Fletcher Building is predicted to be offset by a weak performance in Australian operations, its worst contribution to the group in a decade.
Stockbrokers are predicting today's full-year result for Fletcher Building (FBU) will see increased revenue (to $8.68billion) and earnings before interest and tax (ebit), but a slight decline in after-tax profit.
Forsyth Barr broker Andrew Rooney said FBU was ''currently a two-speed company'', with New Zealand enjoying an increase in construction activity but Australia having depressed demand in the non-residential and infrastructure sectors.
Mr Rooney expects revenue to increase 3% to $8.68billion and ebit up 4% to $652million, but reported after-tax profit down 2% to $333million.
''We forecast Australian earnings before interest and tax of just $NZ120 million for full-year 2015, the lowest contribution toward group profits since 2004,'' he said.
Craigs Investment Partners broker Peter McIntyre said Australian operations were ''clearly still a drag''. He expected
Australian ebit to decline 36%, but New Zealand ebit to gain 20% and divisions from ''rest of world'' up 11%.
''The reduction [by FBU] of 2015 ebit guidance to the lower end of the $650million-$690million range was disappointing, but given the significant under-performance in Australia we are not surprised,'' Mr McIntyre said.
He said the recovery in New Zealand's housing sector was well under way, with additional benefits from repairing leaky homes for up to 10 years and the continuing Canterbury rebuild.
''The recovery in the Australian housing market and a resumption in government-sponsored infrastructure investment will also enable the turnaround in FBU's businesses there,'' he said.
Mr Rooney said FBU's near-term outlook remained positive, with management still implementing a transformation programmeKey drivers include the FBUnite restructuring, which is midway through a five-year programme targeting $100million savings, by having an integrated corporate centre.
Also, there were divestments and rationalisation to consider, Mr Rooney said, saying there were non-core assets and businesses with too much capacity.
FBU was increasing its residential land banking for future use and it had also suggested it was making a market entry into New Zealand roading operations, Mr Rooney said.
