Building up
Fletcher targets earnings of up to $760m
Fletcher Building reiterated its forecast for 2017 operating earnings while lifting the amount it plans to spend on land for housing as it chases a target of boosting the number of homes it brings to market each year.
Fletcher chief executive Mark Adamson told shareholders at their annual meeting in Christchurch yesterday that the construction and building products group was on track to lift earnings to a range of $720 million to $760m, from $682m in 2016.
The Auckland-based company is focussing on lifting earnings from existing assets rather than seeking acquisitions — a strategy affirmed yesterday by chair Sir Ralph Norris, who said while Fletcher remained open to acquisitions, such opportunities “are likely to be limited in number”.
Fletcher spent $89m on land and work in progress in its 2016 year, acquiring “land inventory” to enable the company to bring to market 1,500 homes a year by the 2018 financial year, from 300 in the latest 12 months, Adamson said. Fletcher expects to invest a further $160m in the 2017 year, he said.
The diversified company has completed a restructuring of the busi- ness, selling off unwanted assets and is now turning to what it dubs the “Accelerate” programme: essentially getting more out of what it has and completing the turnaround of underperforming businesses such as Iplex and Tradelink in Australia and Formica Europe.
It also involves beefing up external procurement to take more advantage of Fletcher’s scale and introducing manufacturing efficiencies.
Adamson flagged the strength of the New Zealand dollar, which he said was currently above budgeted levels against the Australian dollar and the greenback, “which is adversely impacting the translation of overseas earnings at present.”