20 Aug 2015

Fletcher Building profit falls 20 percent

8:39 am on 20 August 2015

Fletcher Building's profit has fallen by a fifth, driven down by assets sales, site closure costs and the writedown of goodwill.

Christchurch construction.

Photo: RNZ / Alexander Robertson

The building products and construction company has made $270 million in the year to June, compared with the previous year.

Excluding one-off items, Fletcher's underlying profit rose by 5 percent to $653 million, which is at the lower end of its earlier guidance range.

Revenue rose 3 percent to $8.7 billion.

Fletcher Building chief executive Mark Adamson said New Zealand's growing economy boosted construction and building earnings.

Mr Adamson said trading conditions have been mixed in Australia, with a buoyant residential construction market offset by weak mining, resources and infrastructure sectors.

He said the strength in residential construction helped its Laminex, Fletcher Insulation and Tradelink businesses, but it has been negatively impacted by a sudden fall in demand for plastic pipes from the coal seam gas sector.

He expected construction activity in New Zealand to continue at above average levels, and steady work from government infrastructure projects.

In Australia, he was picking house building to slow, while other construction was expected to remain subdued.

Elsewhere, Mr Adamson expected steady activity in North America, weak conditions in Europe and a highly competitive environment in Asia.

Fletcher will also sell its Rocla Quarry Products for about $AU203 million to Hanson Construction Materials.

The company lifted its full year dividend by 3 percent to 37 cents a share.

Despite the profit fall, the company's share price rose 3 percent to $7.79 on Wednesday.

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