All eyes await Fletcher Building full-year report tomorrow

Under-fire Fletcher Building's full-year report, due out tomorrow, will be dominated by its $660million provision for construction losses this year, but analysts will be straining for positive signs from its restructuring efforts.

In early July, Fletcher announced an emphasis on Australian operations in its restructuring, looking to double its earnings before interest and tax (ebit) over five years.

Over the past two financial years, Fletcher has had to book $952million in losses associated with its Buildings + Interiors (B+I) division, after being caught short on 16 mainly fixed-price contracts, including the Auckland international conference centre and the justice precinct build in Christchurch.

Since then, the company had raised $750million capital and renegotiated its banking facilities.

Forsyth Barr broker Damian Foster said given the recent company guidance, it would not be surprising the headline result tomorrow would be dominated by the $660 million B+I construction losses.

``Outside of construction, we don't expect the result to provide any signs that its revised strategy is bearing fruit,'' he said.

Fletcher's guidance was for full-year ebit; not including the B+I provisions, of between $680million and $720million, but more asset writedowns are expected from Rocla and metal roof tiles assets, which are both for sale.

It sold its 50% stake in recyclers Sims Pacific Metals for $42million in late June.

Mr Foster said underlying trading for Fletcher was ``difficult'', being impacted by competition, rising costs and capacity measures on its profit margins.

Full-year estimate for ebit not including construction or housing was for a 13% decline in New Zealand and 4% down in Australia, he said.

However, Mr Foster said the residential division was expected to be a ``standout'', delivering a strong underlying result after a lift of more than 40% in the volumes sold.

He expected Fletcher to report negative free cash flow, given the construction losses and also higher interest costs.

The August reporting season reached its peak this week in both New Zealand and Australia.

Other local companies due to report earnings included Mercury, The a2 Milk company, Meridian Energy, Spark, TradeMe, Auckland Airport, Ebos Group, Port of Tauranga, Sky Network TV and Vector. Fisher & Paykel Healthcare was also holding an annual meeting which was likely to include a trading update.

In Australia, results were expected from BHP, Amcor, Lend Lease, Sydney Airport, Brambles and edibank.


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