15 Aug 2011

Fletcher Building expected to post profit of $331 million

6:26 am on 15 August 2011

Fletcher Building is expected to post a full year profit of around $331 million on Wednesday, driven by improvements in its laminates and panels business, infrastructure and distribution operations.

The result would be a modest rise on last year's $308 million net profit.

Morningstar Research senior equities analyst Nachi Moghe says restructuring and cost cutting has been the main driver of growth in its Formica division in the United States.

He says the depressed building market in New Zealand and Australia will continue to affect earnings in 2012.

Mr Moghe believes the company will benefit from the leaky homes repairs, worth $2 billion annually, as well as returns from the recently acquired Crane Group in Australia.

But he's excluded the rebuilding of Christchurch from the 2012 forecast because of delays due to continuing aftershocks.

Mr Moghe says when construction does begin in Christchurch it will provide Fletchers with a significant lift to earnings.

He says the building industry in New Zealand is worth $15 billion and the Christchurch rebuild is going to add $2 billion per annum to the sector.