Fletcher Building wants to triple its home building in New Zealand to capitalise on strong demand for housing, particularly in Auckland and Christchurch.
The Auckland-based construction and building materials company has historically built and sold around 300 houses a year and has now set a goal of achieving an annual rate of more than 1,000 homes each year, it told shareholders at the annual meeting in Auckland on Tuesday.
“To meet this goal we need to increase our investment in land and we have successfully negotiated a number of land purchases in the past year,” said chief executive Mark Adamson.
It is also pursuing partnerships with government agencies to improve the quality of social housing.
Departing chairman Ralph Waters said earnings before interest, tax and significant items were forecast to be between $650 million and $690m this financial year from $624m for 2013/14.
The company came under fire from some shareholders over the lower return they received last year and a downturn in company performance since 2005.
Mr Waters said the company has faced substantially more competition since 2006 and the global financial crisis had also had an impact.
But he admitted they had made two acquisitions – Formica and Crane – which haven’t met expected returns.
“They’re both going to be valuable assets in the long-term,” he said.
Following the first three months of trading in the new financial year, the company has seen continued volume growth and improved trading results, although monthly results were volatile, Mr Waters said.
In New Zealand, strong activity levels from last year were expected to continue with the positive trend in housing consents in the second half of last year likely to flow through to housing construction, he said.
However, in Australia the outlook was more patchy with housing consents positive but non-residential less rosy.
Mr Waters said the company didn’t expect a marked improvement in commercial construction in the next year with declining private sector mining investment and relatively low levels of government expenditure on core road and rail projects.