19 Aug 2010

Fletcher Building returns to profit

7:45 am on 19 August 2010

New Zealand's largest listed company, Fletcher Building, has returned to profit, making $272 million in the past financial year.

That is despite total sales falling 4% to $6.8 billion as some of its businesses were hit hard by the economic downturn, particularly in the United States and Europe.

Earnings at its laminates and panels division almost doubled, but earnings at its steel division nearly halved and its infrastructure business was hit by lower concrete sales.

Fletcher Building says its full-year profit was the result of cost-cutting and restructuring its businesses, while trading conditions in both the New Zealand and Australian residential housing markets have improved.

In the previous financial year Fletcher Building lost $46 million.

The company remains cautious about the outlook for the current year, as the effects of the financial crisis are still being in some of it's key markets, in the US and Europe.

It expects the New Zealand residential market to continue to slow, with higher interest rates putting the brakes on construction activity, but anticipates growth in Asia and Australia.

Fletcher Building chief executive Jonathan Ling says the company has a strong balance sheet and $1 billion in unused credit, which he views as ammunition to help weather any unexpected economic challenges, rather than a fund for large acquisitions.

But Mr Ling says the worst of the recession is over, and the company is looking at ways to grow, including new products, upgrading Placemakers branches and making some small acquisitions.

The company will pay a final dividend of 15 cents a share to investors.