21 Aug 2013

Fletcher Building profit up 76%

7:10 pm on 21 August 2013

Fletcher Building's profit surged by 76% as a recovery in New Zealand offset weakness in Australia.

The company on Wednesday reported net profit of $326 million for the 12 months to the end of June, from $185 million a year earlier.

Last year's figure included asset writedown and restructuring costs of $132 million.

The result was above analysts' expectation of a $317 million net profit. However, the largest building firm in Australasia reported operating earnings of $569 million, at the bottom of a guidance range given earlier this year.

Operating earnings in New Zealand before significant items, increased by 38%, driven by rising levels of new house building and strong momentum with rebuilding work in Canterbury.

The company said it has been able to mitigate the impacts of the high New Zealand dollar and increased competition by cutting costs.

The company expects construction activity in New Zealand to increase, while Australia's outlook remains uncertain.

Fletcher Building declared a final dividend of 17 cents per share.

Fletcher Building calls for a dose of Thatcherism in Australia

Fletcher Building sees a pressing need to increase its efficiency in Australia and to get its cost base there down to more competitive levels.

Operating earnings before significant items from its Australian businesses fell by 22% as conditions deteriorated early in the year and continued to be soft.

Residential and commercial markets were weak, and a slowdown in mining and resources investment had a knock-on effect across other parts of the construction industry.

Australia is Fletcher's biggest market after New Zealand.

Its chief executive Mark Adamson says Australia has antiquated union conditions and the country needs a dose of former British prime minister, Margaret Thatcher's, economic medicine.