Fletcher Building has been offloading unprofitable assets. Photo / NZME
Fletcher Building has been offloading unprofitable assets. Photo / NZME
Fletcher Building, the listed building supplies and construction group, posted a 51 per cent gain in first-half profit, with growth in its newly aligned building products and distribution units making up for weaker earnings from Formica and New Zealand housing developments.
Fletcher shares rose 2 per cent to $6.99 afterthe company reported net profit of $172 million, meeting analyst expectations, for the six months ended December 31, on a 2 per cent gain in revenue to $4.4 billion.
The company also affirmed guidance for full-year of earnings before interest, tax and significant items of $650 million to $690 million, from $653 million last year, excluding a gain on the sale of Rocla Quarry Products. Its interim dividend of 19 cents is up from 18 cents a year earlier, beating expectations.
Earnings in the latest six months included a $10 million gain related to the sale of Rocla Quarries assets, while the rest of the $85 million profit from the sale will be booked in the second half. At the same time last year it took $66 million in impairments and costs to close manufacturing plants in Australia.
Fletcher this month announced it had reorganised into five divisions and reported first half results on that basis. It has been shedding unprofitable assets to focus on businesses where it has a dominant position, acquiring Higgins Group Holdings for $315 million.
Separately yesterday it announced a joint venture with National Aluminium, or Nalco, folding its aluminium assets into the venture and closing its own manufacturing plant in Auckland within 18 months.
The building products division made the biggest contribution to first-half earnings, led by building materials such as wallboard and insulation, and increased cement volumes in New Zealand. The division lifted operating earnings by 65 per cent to $142 million, as revenue fell 4 per cent to $1.27 billion.
Distribution division earnings jumped 88 per cent to $64 million.
