2019
01/13

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Fletcher $NZ326m profit beats estimates

Fletcher Building has bounced back into annual profit, led by growth in its New Zealand operations and an absence of the year-earlier charges in Australia, where trading is expected to remain weak.

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Net profit jumped to $NZ326 million ($A289.16 million) in the 12 months ended June 30, from $NZ185m a year earlier, when the Auckland-based company took $NZ132m of charges.

Sales fell four per cent to $NZ8.8 billion.

Profit beat First NZ Capital’s estimate of $NZ304m though New Zealand’s largest construction and building products group confirmed the brokerage’s concerns about Australia, saying the outlook in its second-largest market “remains soft and uncertain”.

By contrast, in New Zealand construction activity is expected to pick up, driven by housing in Auckland and the rebuild of Christchurch.

“A sustained improvement in activity levels in New Zealand coupled with operational efficiency gains should drive earnings growth,” the company said.

“However, no significant volume growth is forecast in the Australian market and any further deterioration from current levels will temper the group’s earnings momentum.”

The company gave no specific earnings guidance, saying it will update shareholders at their annual meeting in October.

Fletcher will pay a final dividend of 17 NZ cents a share, making NZ34c for the year, unchanged from 2012.

The shares rose 2.3 per cent to $NZ8.40 in early trading and have slipped two per cent this year.

Full-year operating earnings were $NZ569m, at the low end of the $NZ560m to $NZ610m guidance Fletcher gave with its first-half results in February.

Still, the company lifted its estimate for annual cost savings from its FBUnite program to break down silos between divisions to between $NZ75m and $NZ100m, from a $NZ75m target previously.

Earnings before interest and tax and excluding one-time items (Ebit) in New Zealand climbed 38 per cent to $NZ286m, while in Australia earnings on that basis fell 22 per cent to $NZ203m. For the rest of the world, earnings slipped to $NZ80m from $NZ90m.

The company garners 45 per cent of its sales in New Zealand and 50 per cent of Ebit, while Australia generates 43 per cent in revenue but only 36 per cent of earnings.

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