Fletcher Building shares rose 32c, or 4.2 percent, to $7.96 in afternoon trading after the country's largest building company reported a better-than-expected 10 percent drop in interim profit.
The sharemarket's largest company posted net earnings of $154 million in the six months to December 31, down from $172m in the same period last year.
Total sales also fell 10 percent, to $3.39 billion, with lower sales in the steel and New Zealand concrete business offset by stronger insulation and construction sales. Sales from the steel division dropped 25 percent, laminates and panels fell 10 percent and Australasian concrete sales fell 13 percent.
The interim dividend of 14 cents per share is payable on April 21, and is down from 24c last year. It is in line with guidance provided at the annual meeting.
"It beat market expectations. I think the result shows the diverse nature of the company now. Even though the steel division had weak earnings other divisions performed quite well," said Grant Williamson, director of Hamilton, Hindin, Greene.
"People were more than happy with the forward comments,'" he said.
The company noted improved residential building markets in New Zealand and Australia, continued infrastructure spending in both countries and successful cost reduction initiatives. Capital expenditure is down 53 percent, while cash flow from operations is up 52 percent.
"What has also given us cause for optimism is that the operating earnings in the first half of the 2010 financial year were 15 percent higher than for the second half of the prior year," chief executive Jonathan Ling said.
"We have had a noticeable pick-up in trading activity in the October to December period of 2009, with growth in sales and earnings in those businesses with exposure to the New Zealand and Australian residential housing markets.
"This suggests that we are finally starting to see a recovery in residential construction activity in New Zealand and Australia, albeit from a very low base," Mr Ling said.
The company has undrawn credit lines of $1.1 billion and the average maturity of its debt is six years.
The company was in a "very strong financial position" and in a good position to take advantage of what it saw as a recovery in the Australian and New Zealand housing markets, Mr Ling said.
The company's outlook was dependent on the uplift in New Zealand and Australian new housing construction markets being sustained.
Government infrastructure spending was expected to underpin the construction, concrete and steel businesses but weak commercial building activity was expected to continue.
The infrastructure construction division has a $1.1b backlog of work as at December.
Government insulation scheme changes would reduce the contribution from this business in the second half.
