Shares drop 2% after announcement.
Fletcher Building’s Formica division has delivered a final hit to earnings as its sale completes early, with the loss of its June numbers and soft performance in US and European operations taking $30 million off the group’s forecast June results.
The company’s shares fell 12c, or 2%, to $5.13 in early trading, reducing its market capitalisation by $100m.
Fletcher announced the $US840m sale of Formica to Broadview Holdings in December, saying it expected the deal to complete by the end of June.
The transaction’s completion was announced this morning.
After deductions for working capital adjustments and transaction costs the sale proceeds are $US795m, or $1.185 billion.
The company said it would update shareholders at a June 26 investor day on how the proceeds would be applied.
In a statement Fletcher chief executive Ross Taylor said the Formica sale was a key aspect of its five-year strategy announced last June.
“Our strategy is to refocus Fletcher Building’s capital and capability behind our New Zealand and Australian businesses, with building products and distribution at our core.”
Fletcher updated its earnings guidance for the year to June, saying it now expected earnings before interest and tax of $620m to $650m, down from guidance provided in February of $650m to $700m.
Fletcher had previously increased its guidance by $20m to adjust for the lack of depreciation on Formica’s held-for-sale assets.
The company said the upper end of the forecast range had also narrowed “to reflect year-to-date trading across the balance of the company.”
