Sales, profit gains tipped for Fletcher

Construction lag times may be over for Fletcher Building, as positive signs of growth show in Christchurch's rebuild and more homes being built in Australia.

Fletcher delivers its result for the full year to June tomorrow, and brokers are predicting gains in sales and after-tax profit.

The results should be in line with Fletcher's guidance, a consensus of analysts predicting earnings before interest and tax of between $560 million and $610 million.

Australian building work has been softer than expected as its economy cools and the Christchurch rebuild, in which Fletcher is the lead contractor, has been stubbornly slow in gaining impetus.

Craigs Investment Partners' research is forecasting a gain in sales from $8.62 billion a year ago to $9.97 billion and earnings before interest, tax, depreciation and amortisation up from $672 million to $803 million.

Craigs broker Peter McIntyre expected after-tax profit would be up about 24%, from $257 million to $318 million.

''The New Zealand housing recovery is under way and there's plenty of potential from the Christchurch rebuild. While the Australian [housing] recovery has lagged, that's got potential too,'' he said.

He noted while Australian home numbers are up, research was expecting lag times to increase from three to six months, which would impact on earnings.

For the year ahead, Mr McIntyre expected a 25% growth in New Zealand's housing sector, with 21,400 new homes added, and a 5.9% gain in Australia, from 153,4000 homes to 163,500, in full year 2014.

For 2014, Mr McIntyre expected almost 10% of Fletcher's overall earnings before interest and tax would come from Christchurch, much of the positives coming from major civic construction and infrastructure projects, the latter perhaps taking several years to complete.

Fletcher has been going through a round of cost reductions, many of which are yet to be announced, and Mr McIntyre hoped more detail would be provided in the financial result.

''Management have outlined about $75 million of cost reductions achievable over the next three years,'' he said.


At a glance

Companies expected to report today include: Contact Energy, Precinct Properties, Coca-Cola Amatil and Ebos. Tomorrow, companies reporting include Auckland International Airport and Trade Me.

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