Fletcher Building Group’s financial statements for the half year ended to 31 December 2014 show that it’s half year profit has fallen from $154 million to $114 million.
The financial statements were announced just before 9am this morning and highlights the fact that the company is enjoying good results in New Zealand, but these are offset by some struggles within several of its Australian businesses.
Site closures in Australia and New Zealand as well as impairment of goodwill accounted for $66 million of significant items charged in the financial statements.
Operating earnings excluding significant items were $290 million, up 3%, and revenue of $4.3 billion was up 1%.
The New Zealand Herald reports that there have been contrasting expectations from analysts in Australia and New Zealand.
The Herald says Wellington-based Forsyth Barr analysts Andy Bowley and James Bascand had forecast $161 million net profit after tax for the first half of the financial year, up 4.7% on the previous year.
“Fletcher Building is due to report another polarising result. Further advances in New Zealand given improving activity levels will be offset by apparent struggles in several key Australian businesses,” they say.
According to The Herald, Sydney-based UBS analysts David Leitch and Andrew Moller said the strong local building cycle in New Zealand had been Flectcher investors’ friend.
Non residential consents are up 29% year on year, and residential consents are up 18%, supported by concrete production up by at least 15% says Leitch and Moller.
However the Sydney-based UBS analysts said they have never been convinced that Fletchers’ disparate portfolio of businesses within Australia form a united whole with common goals or natural strategies.
“As such we think that over time a more focussed and easily understood portfolio will emerge. Rolla, Strait, Laminex, and TradeLink are unrelated businesses. They have different manufacturing technologies, different end markets, and different distribution channels.”
Credit Suisse analysts told The Herald that the recovery in the New Zealand building market, a projected recovery in the United States non-residential sector and cost savings from chief executive Mark Adamsons’s FBUnite programme were all positives for Fletcher.
They also expected the domestic construction sector to improve further. This was driven by a combination of residential and non-residential work in Auckland and Christchurch, and generally assisted by strong net positive migration to New Zealand.
