Fletcher Building profit up at $283m

Construction giant Fletcher Building says its net profit for the full year to June 30 was $283 million compared with $272 million in the previous year.

Net earnings before unusual items were $359 million compared with $301 million in the previous year.

Fletcher Building will pay a final dividend of 17 cents a share versus 15 cents a year ago.

Unusual items totalled $76 million including costs associated with its takeover of Australia's Crane Group and equipment and goodwill write-offs in the Australian and New Zealand insulation businesses.

While it didn't provide any specific guidance for the current fiscal year, Fletcher Building expects a gradual improvement in New Zealand housing starts and a boost in overall construction activity as the Christchurch rebuild gains momentum throughout the year.

Demand in Australia is expected to stay at current reduced levels in the near term while trading conditions in both North America and Europe continue to remain flat with no recovery of significance expected in those markets in the near term.

Chief executive Jonathan Ling says the result reflected the very mixed trading conditions seen in markets the company operates in.

“The result was driven by strong performances in our infrastructure and laminates and panels divisions, together with the initial contribution from Crane.”

Total revenue was $7.42 billion, up from $6.79 billion in 2010 with operating revenue up from $521 million at $596 million.

Revenue in New Zealand was mixed, with growth in concrete products and residential house sales but lower sales in most other building products, steel, and construction.

Many businesses were impacted by the disruption to trading following the Christchurch earthquakes, he said.

In Australia, revenues were significantly down in the Australian insulation business as a result of the sudden termination of the government’s insulation retrofit scheme.

"The inventory and goodwill write-offs in our Australian insulation business are disappointing. We've seen significant disruption to the market since the termination of the government's retrofit insulation scheme last year and no sign of any improvement. As such, we have had to confront the financial reality and adjust asset values accordingly", Mr Ling said.

Formica continued to generate strong sales growth in Asia.

He said the company continues to see good opportunities across Australia and New Zealand to further invest in new businesses, bolt on acquisitions or through organic growth of its existing businesses.

“For the next few years the company will continue to focus on opportunities in New Zealand and Australia, and on growing the Formica business particularly in Asia.”