Oz gains help boost Fletcher profit 71%
Solid results locally and across Ditch keep earnings on target but builder picks consents here to peak in 2018
Fletcher Building posted a 71 per cent gain in full-year profit, and met its earnings guidance, driven by an improved performance in Australia and gains in its New Zealand distribution, residential and construction divisions.
Net profit rose to $462 million from $270m, the Auckland-based company said. Total revenue gained 4 per cent to $9 billion. Operating earnings before interest and tax (ebit) and excluding one-time items was $682m, within the company’s guidance range of $650m to $690m.
The latest results include one-time gains of $44m, including a $90m gain on the sale of the operations of Rocla Quarry Products to Hanson Construction Materials, offset by an impairment against its Formica India manufacturing assets and charges for plant closures. In the previous year it recognised one-time charges of $129m, mainly reflecting impairments and closure costs against its Australian operations. Australian earnings climbed 29 per cent to $154m in the year ended June 30, even as revenue across the Tasman slipped 3 per cent to $3.04b.
“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,” said chief executive Mark Adamson.
The company gave guidance for 2017 of ebit in a range of $720m to $760m, helped by the contribution from Higgins Group, the rival construction group it gained antitrust approval to buy for $303m. Higgins was likely to offset the impact of its discontinued Pacific Steel, Rocla Quarry Products and Fletcher EQR businesses.
Adamson said the earnings gain would be reflected in the current six months, with first-half ebit expected to be up on the year-earlier result.
Fletcher sees residential building consents in New Zealand peaking in 2018, while non-residential activity is seen remaining “steady at elevated levels”. Infrastructure work is expected to grow. In Australia, residential construction is expected to gradually decline after a peak this year, with little growth forecast in non-residential activity.
For the rest of the world, Fletcher sees moderating growth in China and modest growth in its Taiwan and Southeast Asian markets. It sees relatively low growth in North America and a mixed outlook for Europe, with modest UK growth.
Fletcher will pay a final dividend of 20c a share, fully tax paid, on October 12. That brings total payments for the year to 39c.
For New Zealand shareholders it expects to be able to fully impute dividends through to 2019 while in Australia it will fully frank final dividends “where possible”.
Fletcher shares closed up 47c yesterday at $10.16.