Fletcher profit up 4%; revenue down at $8.4b

Fletcher Building has reported a 4% increase in profit for its trading year to June - which takes into account a $32 million write-down from the sale of Pacific Steel and Hudson Building Supplies businesses.

Revenue dipped in line with analysts' expectations, from $8.51 billion last year to $8.40 billion, while earnings before interest and tax (ebit) grew from $569 million to $592 million and net earnings rose from $326 million to $339 million.

Fletcher is lead contractor in the Canterbury rebuild, where the peak for earnings potential has been pushed out to the end of next year, but the company was confident the New Zealand work backlog in general would boost further earnings growth.

Fletcher Building's chief executive Mark Adamson said the underlying result was a strong one, despite currency headwinds and subdued trading conditions in Australia for much of the year.

''We would have met the top end of our guidance range had the New Zealand dollar not strengthened the way it has over the past year,'' Mr Adamson said.

Craigs Investment Partners broker Peter McIntyre said the result was ''in line'' with expectations, noting strength from New Zealand and weakness in Australia, and the latter hit by foreign exchange losses, albeit with expectations of improvement.

Demand in New Zealand was expected to remain strong in all sectors, and positives from the Canterbury rebuild were expected to continue, Mr McIntyre said.

''In Australia, residential and commercial activity is set to improve, but the mining and infrastructure sectors will be subdued,'' he said.

Forsyth Barr broker Andrew Rooney said Fletcher's earnings were in line with expectations, with a strong New Zealand performance seeing ebit here rise 27% for the year.

''Activity levels in New Zealand are also highlighted by the current construction backlog, now at $1.82 billion compared to ... $1.02 billion at June 2013,'' Mr Rooney said.

The outlook for New Zealand remained ''very positive'', residential, and non-residential sectors continuing to benefit from rising activity levels, while Fletcher was talking of a ''marginally better picture'' for the Australian market.

Fletcher's outlook said that in the 2015 financial year, the strong activity levels experienced in the New Zealand market were expected to continue, noting the Canterbury Home Repair Programme was expected to be ''substantially complete'' by the end of December.

''It's expected that further earnings growth will be achieved in the year ahead, with a strong construction backlog in New Zealand and further benefits from FBUnite [restructuring],'' the company said.

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