Fletcher half-year profit tumbles

By Paul McBeth

Thursday 12th February 2009

Fletcher Building, New Zealand's largest construction company, posted a 27% drop in its half-year profit as the group's operations suffered from greater exposure to the global economic slowdown.

Earnings fell to $172 million, or 34 NZ cents per share, in the six months ended Dec. 31, from $235 million, or 47 cents, a year earlier, the Auckland-based company said in a statement. Sales rose 6% to $3.76 billion, even as volumes fell, reflecting higher steel prices and ongoing construction activity in New Zealand. To combat rising costs and falling revenue, the company has laid off nearly 1100 staff worldwide.

"We have seen extremely tough trading conditions in most of our key markets," said chief executive Jonathan Ling. "In response to this we have a range of further cost reduction initiatives underway."

Fletcher has retained its 24 cent interim dividend as total shareholder returns fell 4% in the first half. The company's stock rose 1% to $5.50 yesterday, having tumbled almost 40% in the last 12 months.

Companies exposed to the building industry worldwide are suffering as consumer spending and housing demand slump. Its chief rival in Australia, Boral, yesterday posted a 44% slide in first-half profits, blaming the collapse in house construction in the US.

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