KEY POINTS:
Fletcher Building's half-year result tomorrow could be dampened by a bad run that included a steel mill breakdown and a fire at a Taupo plant, analysts say.
One is forecasting a 2 per cent drop in net profit and another has issued a list of unfortunate events but
observers remain optimistic about the company, which has been poised to expand for the last year by making another large acquisition.
Forsyth Barr analyst Rob Mercer is expecting a 5 per cent earnings lift to $199 million and a 22c interim dividend, up from 19c in last year's result.
He remains upbeat about Fletcher, recommending it as a stock to buy and predicting tomorrow's announcement would confirm a positive outlook for the year, although it might be too early for a revision of the profit guidance released at last year's annual meeting.
Fletcher shares closed at $11.40 yesterday, well ahead of Forsyth Barr's more conservative "fair valuation" of $10.66.
Mercer noted the company's bad run lately and listed a group of "likely negatives", including disruptions through the breakdown at its Pacific Steel mill in Otahuhu which suffered an electric arc furnace transformer failure late last year.
He also mentioned the fire at Fletcher's medium-density fibreboard plant at Taupo where insurance issues are yet to be settled.
Fletcher's Australian insulation operations had been losing market share and under-performing, he said. Cement price increases had been delayed until this month though volumes were exceeding expectation.
And six months of excessively wet weather must have had a negative impact on building activity, he said.
But he also outlined "likely positives", including a pickup in residential building activity, which was not anticipated at the time of Fletcher's annual result issued in August.
Fletcher's Australian operations should defy trends set by the company's competitors such as Boral and he expects the laminates and panels division to deliver an increase in earnings before interest and tax.
A rising dividend would continue the positive trend established by the company and there could be more information on the potential benefits of extending Fletcher's Hunua quarry resource consent by another 30 years, he said.
