16 Aug 2010

Fletcher Building's Australian market 'likely to grow'

8:03 am on 16 August 2010

An analyst is expecting Fletcher Building to derive an increasing proportion of its income from the faster-growing Australian market in coming years.

New Zealand's largest listed company releases its full year results on Wednesday, and has forecast earnings of between $278 and $303 million.

A senior equities analyst at Morningstar, Nachie Moghe, is expecting the firm's operating profit to be slightly above that range, at $305 million.

Mr Moghe says falling steel prices will have hit Fletcher Building's steel division, but its laminates business, Formica, in the US should be benefitting from slightly improved volumes, and savings through restructuring.

He also thinks the company's building products division will have performed better than expected because of a backlog of infrastructure projects.

Mr Moghe says Fletcher is doing well in Australia, particularly in certain businesses such as laminate, panels and some areas of infrastructure.

He says the Australian business accounts for about 35% of operating profits, and is growing, while New Zealand accounts fo 52% of operating profits.

Mr Moghe predicts that in five years time Australia and New Zealand could each make up about 45% of Fletcher's profits.

He says there's probably still too much uncertainty in international markets for Fletcher Building to comment on its expectations for the year ahead.