21 Oct 2011

Fletcher Building investors urged to keep the faith

7:01 am on 21 October 2011

The head of Fletcher Building is defending his handling of the company's profit downgrade last week that triggered a panic selloff, wiping around $800,000 off its value.

The building products and construction firm's share price has fallen 20% since the profit warning last week caught investors by surprise.

Its shares have settled around $6.43 compared with a year high of $9.53 in April.

Chief executive Jonathan Ling says the company could not have informed the market sooner of the downgrade caused by rapidly deteriorating housing markets in Australasia and the Christchurch rebuild delay.

He says the New Zealand and Australia new house building rates are now below what they were during the worst of the global financial recession in 2009.

Mr Ling says Fletcher Building is still estimating it will generate $359 million in after tax profit this year.

He says it would not have been possible to let the market know of a profit downgrade any earlier.

Mr Ling says the board approved the company's budgets for the 2012 year in June and even then it was assumed there would be 150,000 new houses for Australia and 15,000 for New Zealand.

He says August 2011 figures were down slightly, but that doesn't constitute a trend and then volumes were also down in September and falling very rapidly, particularly in Australia.

Mr Ling told the Thrive business conference in Auckland that Fletcher Building now has more than 100,000 jobs in Christchurch.

He said the firm is already undertaking demolition work and house repairs but new house builds and infrastructure replacements are on hold.