Building off to a better start

By Phil Boeyen, ShareChat Business News Editor

Tuesday 13th November 2001

Fletcher Building (NZSE: FBU) says it's had a good start to the financial year and is confident that interim earnings to the end of December will be substantially ahead of last year.

Speaking at the company's AGM the company's chairman, Rod Deane, told shareholders that nearly all Fletcher Building's businesses have traded better in the first quarter than for the same period last year.

"Among the biggest improvers are Upstream Steel and South America. Construction, Concrete and Distribution are trading ahead of budget. There is a shortfall to budget in Building Products, arising largely from the impact of power prices across that group in July and August.

"In almost all of our businesses, the improved performance that became apparent in the first 3 months of trading was maintained through the first quarter of this year."

The building company reported a disappointing interim result last year, losing $46 million dollars as a result of writedowns, unusual losses and restructuring charges. Even excluding unusual items, profit after tax was only $8 million, well down on the previous year's result.

However things are looking considerably brighter this year. Shareholders at the AGM were told that unaudited results for the September quarter show earnings before interest and tax of $35.9 million, up $15 million or 73% on last year. Net profit after tax and minority interests for the quarter was $15.5 million, also significantly higher than previously.

Dr Deane says the company should be reasonably placed in the event of any near-term economic slowing in New Zealand arising from international influences.

He says there is little exposure to international demand and the company will benefit from any increased government spending on infrastructure and from a substantial backlog of construction work pulling through demand for building products.

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