You are using an older browser version. Please use a supported version for the best MSN experience.

Australia helps Fletcher lift profits

NZ NewswireNZ Newswire 16/08/2016 Jonathan Underhill

Fletcher Building has posted a 71 per cent gain in full-year profit, driven by an improved performance in Australia and gains in its New Zealand distribution, residential and construction divisions.

Net profit rose to $462 million from $270m, the Auckland-based company said on Wednesday.

Total revenue gained 4 per cent to $9 billion. Operating earnings before interest and tax and excluding one-time items were $682m, within the company's guidance range of $650m to $690m.

The latest results include one-time gains of $44m including a $90m gain on the sale of the operations of Rocla Quarry Products to Hanson Construction Materials, offset by an impairment against its Formica India manufacturing assets and charges for plant closures.

Australian earnings climbed 29 per cent to $154m in the year ended June 30, even as revenue across the Tasman slipped 3 per cent to $3.04b.

"While the macro-economic environment in Australia was mixed, we delivered strong earnings growth from our Australian business portfolio, which was the result of our focus on improving the performance and capability of our businesses in that market," chief executive Mark Adamson said.

The company gave guidance for 2017 of ebit in a range of $720m to $760m, helped by the contribution from Higgins Group, the rival construction group it gained antitrust approval to buy for $303m. Higgins was likely to offset the impact of its discontinued Pacific Steel, Rocla Quarry Products and Fletcher EQR businesses.

Fletcher sees residential building consents in New Zealand peaking in 2018, while non-residential activity is seen remaining "steady at elevated levels". Infrastructure work is expected to grow. In Australia, residential construction is expected to gradually decline after a peak this year, with little growth forecast in non-residential activity.

For the rest of the world, Fletcher sees moderating growth in China and modest growth in its Taiwan and southeast Asian markets. It sees relatively low growth in North America and a mixed outlook for Europe, with modest UK growth.

Fletcher shares last traded at $9.69 and have gained 32 per cent this year.

image beaconimage beaconimage beacon