Amid increasingly strengthening conditions in its home market, New Zealand’s largest construction company expects a significant increase in earnings during the current financial year.
Coming off a profit of $NZ569 million (operating earnings before significant items) ($A500 million), construction giant Fletcher Building says it told its annual general meeting on Wednesday it expected earnings of between $NZ610 million and $NZ650 million in the current financial year.
Driving this growth is a substantial recovery in new home building levels as well as commercial building and civil construction work associated with the Christchurch rebuild in Fletcher’s home country of New Zealand, where the seasonally adjusted number of residential building consents in the first eight months of this year was up by nearly a quarter on the same period last year.
Elsewhere, however the company says the outlook in Australia remains uncertain amid negative implications from the resource construction slowdown and no significant improvement in housing start numbers expected whilst that in China and Taiwan remains uncertain, commercial activity in the US is expected to remain subdued and no material improvement was expected for Europe – albeit with momentum in the US residential sector continuing and a positive outlook for South East Asia.
“In Australia, there has been no noticeable improvement in volumes since the new financial year began and our prognosis for the year is for relatively flat conditions” chairman Ralph Waters told shareholders.
The company is also being affected by a strong currency against the Australian dollar, which it says is likely to wipe $NZ15 billion off earnings during the current financial year.
Last month, the company advised the market about a probe by the New Zealand Commerce Commission into its plasterboard supply arrangements with building supplier merchants.
In April, the company announced structural changes within its crane division, which it said would cease to operate as a stand-alone division and would be absorbed into other areas of the company.