Fletcher Building Profit up $58m

Thursday, February 18th, 2016
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Fletcher Construction New Zealand
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Fletcher Building posted a 51 per cent gain in first-half profit, reflecting changes in one-time items from the year-earlier period and a modest increase in revenue.

Net profit rose to $172 million in the six months to December 31, from $114m a year earlier, the company said.

Revenue advanced 2 per cent to $4.4 billion.

Earnings in the latest six months included a $10m gain related to the sale of Rocla Quarries assets, while in the first half last year, it took $66m in impairments and costs to close manufacturing plants in Australia.

It affirmed its guidance for the full-year of earnings before interest, tax and significant items in a range of $650m-$690m, up from $653m last year and excluding the Rocla gain.

Fletcher has been shedding unprofitable assets to focus on businesses where it has a dominant position.

This month it acquired of Higgins Group Holdings, New Zealand’s third-largest road construction and maintenance company, for $315m, having sold Rocla Quarry Products to Hanson Construction for a profit of $85m, that will be booked in the current year.

The profitable Higgins won’t contribute to profit this financial year because the deal settles at the end of June.

“The current strong market conditions in the New Zealand construction industry are expected to persist through the 2016 financial year, with ongoing demand for new housing particularly in Auckland and surrounding provinces,” the company said.

By contrast, the outlook for Australia remains mixed, residential and commercial construction activity levels in North America would continue at the same levels as in the past year, while Europe was still faced with a generally weak economic outlook. Growth is seen in Southeast Asia but market conditions in China “remain highly competitive”.

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