A big thumbs down from Australian investors to the half year result from Fletcher Building (FBU), Australasia’s biggest construction group.
Fletcher yesterday reported that after-tax profit for the six months to December 31 rose 2% to $NZ176 million, a figure that clearly disappointed the market.
But that figure included $NZ11 million in costs in closing two plants and net earnings excluding significant items (or underlying earnings) were 18% higher at $NZ187 million.
But investors in Australia still didn’t like the result and the shares lost 5.7% on the day to end at $A8.93.
The profit was struck on a 4% rise in revenue to NZ$4.6 billion, as its New Zealand businesses grew and the purchase of the Higgins contracting business made a bigger contribution.
Fletcher Building chief executive Mark Adamson said the company’s distribution and international businesses had driven the improved result.
“The strength of the macroeconomic environment in New Zealand has helped the performance of the Distribution businesses but it has also managed the mixed economic conditions in Australia to report operating earnings of $84 million versus $64 million last year.”
“The International division is now starting to show the benefit of cost reductions, operational efficiencies, restructures and new product initiatives across the Formica and Laminex group of companies. The 32% improvement in operating earnings in the first half of this year was primarily driven by year on year improvements at Formica Europe and Formica Asia.”
“Across New Zealand we were pleased to see operating earnings excluding the performance of the Construction division and divested and acquired businesses increase 20% year on year, indicating the positive impact of continued demand across the residential building and infrastructure sectors.”
Operating earnings (earnings before interest and tax and significant items) were $NZ310 million, up 12% on the $NZ278 million reported in the the first half of 215-16. An interim dividend of 20.0 cents share will be paid on 12 April 2017. That’s up 5% on a year ago.
The company reiterated the AGM guidance for the full year results with operating earnings (earnings before interest, tax and significant items) for the 2017 financial year expected to be in the range of $NZ720 million to $NZ760 million.
