Building activity will have to climb significantly to see a dramatic earnings increase this financial year, Fletcher Building's Mark Adamson says.
Mr Adamson, who will take over from chief executive Jonathan Ling in October, said at a briefing in Auckland today following its full-year result, he does not think a 20% lift in earnings is possible this financial year given the poor outlook for construction.
"We would need to see a significant increase in activity beyond where we are today."
That comment comes after analysts' optimism ahead of the company's result.
Fletcher's share price (NZX: FBU) tumbled 28 cents, or more than 4%, by midday, to $6.38.
Mr Adamson says the business's strategic review, involving external consultants, will identify further cost reductions and possible divestment of "non-core assets".
He says the company wants further efficiencies to drive earnings ahead of the cycle.
However, he says he doesn't have Mr Ling's drive to spread the business more geographically.
However, he says those projects will not start in earnest until the second half of the financial year, shifting any revenue to FY14.
Mr Ling says momentum is starting to build for Christchurch's rebuild.
"My view is that it will be a long, hard, slow road," he says.
"It's going to take quite some time to get back to the levels of house-building we were doing before the earthquake."
'Tougher than expected'
Fewer new houses being built and ongoing earthquakes in Christchurch led to a tougher than expected year, Mr Ling says.
the key markets in which Fletcher competes remain difficult.
"The year has been tougher than anticipated and tougher than the prior year."
He says New Zealand experienced lower levels of new house building, ongoing disruption to the Canterbury rebuild, and a slowdown in commercial construction infrastructure spending.
Australia residential and commercial consents continues to slow.
Fletcher Building's concrete and cranes division increased earnings. The building products, construction, distribution, laminates and panels and steel divisions all had significant declines.
The company makes 41% of its revenue from New Zealand, 47% in Australia, with 12% in the rest of the world.
Fletcher will hold its annual shareholders' meeting in November.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- Trilogy International CEO Angela Buglass on tripling her profit
- Eroad CEO Steven Newman talks about his company's revenue increase
- What do the latest terrorism attacks in Mali and Israel mean? Nathan Smith discusses the latest foreign affairs news
- NZ Windfarms departing director Michael Stiassny speaks out after board exit
- James Mayo talks about SOS Hydration's growth plans after Snowball offer
- Michael Wood on whether he would run in Mt Roskill
- SAFE's Abi Izzard quizzed over protest of a caged hen operation at Pukekohe
- Nevil Gibson talks about Editor's Insight on the planned $US150 million merger between Pfizer and Allergan
- Taupo Beef’s Mike Barton on how to extract sustainable profit from farming
- Will the government lose on RMA reform? Rob Hosking outlines the PM's speech
- How could bookmakers recoup $16 million? Racing Board chief executive John Allen explains
- Nevil Gibson breaks down the latest aviation news