17 Aug 2016

Fletcher Building year profit pushes higher on building boom

12:30 pm on 17 August 2016

A strong New Zealand building sector and rebound in Australia has driven Fletcher Building's annual profit higher.

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Fletcher Building's profits have been boosted by a construction boom around the country. Photo: 123 RF

The country's biggest listed company reported a net profit of $462million for the year ended June compared with $270m a year ago, which was affected by large write-offs.

Fletcher's underlying earnings rose 4 percent to $682m at the top end of the company's forecast range, and group revenue broke through $9 billion.

Chief executive officer Mark Adamson said the result was driven by a 29 percent lift in operating earnings from its Australian businesses, particularly in house building, while the New Zealand operations were strong across the board.

"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."

"What was equally pleasing was the continued growth in earnings from our New Zealand distribution, residential development and construction businesses. These are all areas we have highlighted as offering strong growth potential."

The company is at the centre of a multi-billion dollar construction boom in New Zealand, with major projects including Auckland's international convention centre, major roading projects in the North Island, and the continuing Canterbury earthquake rebuild.

However, its other operations around the world, which include Laminex and Formica panel manufacturing, were mixed, with flat performance in Asia and North America, and weakness in Britain.

Earlier this year Fletcher Building bought roading company Higgins for $315m, and set up a windows and doors joint venture with partner NALCO.

The strength in the local building market is expected to continue for the next couple of years, while strong growth from infrastructure projects and a pick up in overseas businesses is expected to drive growth in earnings.

The company has forecast operating earnings - before interest, tax and one-off items - in the range of $720m - $760m for the coming year.

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