Profits up, but Crane counts cost of battle

Pipeline manufacture for the building and telecommunications sectors is tipped to be a growth area for Crane Group this year. Picture / Bloomberg

Crane Group, the Australian and New Zealand building and industrial products business at the centre of Fletcher Building's hostile takeover, pushed up its earnings and profit.

But Fletcher's takeover is costing it money.

Crane declared A$18.2 million ($23.7 million) net after-tax profit in the half-year to December 31, up on its A$15.9 million in the half-year to December 31, 2009.

Greg Sedgwick, managing director, cited improving business conditions here and in Australia in various divisions, which pushed up earnings, and he welcomed trade distribution's improved underlying performances.

But he took a swipe at Fletcher, saying its takeover along with a Crane acquisition resulted in extra costs.

"A significant item expense of A$2.8 million after tax was incurred during the period relating primarily to acquisition costs in relation to the A$32.7 million purchase of Hudson Building Supplies on 1 November 2010 and transaction costs incurred in responding to the Fletcher Building Australia takeover offer."

Some A$600,000 was incurred from the Fletcher bid for "adviser costs, shareholder letters, responding to the takeover, etc", he said.

Fletcher says its management and operating model outperforms Crane in earnings growth and dividends.

Sedgwick forecast a solid trading result for the second half of the year and predicted growth from pipeline manufacture and distribution from building, telecommunications and mining.

"In trade distribution, strong growth in Western Australia and a continued recovery in New Zealand will underpin ebit improvement," he said.

The Hudson purchase would contribute about A$3 million for the full year as acquisition synergies were realised.

Fletcher's half-year result is due out next month.

Crane made net after-tax profit of A$36.8 million last year and is tipped to improve this by 5 per cent to A$38.6 million this financial year.