Fletcher Building reports 10 per cent profit drop

New Zealand's largest listed company, Fletcher Building, has reported a 10 per cent drop in profit for the six months to December 31.

The company made net earnings of $154 million, compared to $172m for the previous six months.

The company's total sales also fell 10 per cent, to $3.393 billion, due to "subdued trading in most markets", it said in a release to the stock exchange today.

Earnings were 25.5 cents per share, down 25 per cent from the previous half's 34.1 cents, with an interim dividend of 14 cents per share, payable on April 21.

"As we expected, the tough economic conditions in most of the markets in which the group operates negatively impacted our results," chief executive officer Jonathan Ling said.

The company reported an operating surplus before unusual items and tax of $219m, down 10 per cent from last half's $243m.

Sales from the company's steel division dropped 25 per cent, laminates and panels fell 10 per cent and Australasian concrete sales were down 13 per cent.

However, government stimulus measures had pushed insulation sales in New Zealand and Australia up 39 per cent, helping the company to head off the worst effects of the recession, Mr Ling said.

Restructures and strong cashflow performance across the group meant the company was in a " very strong financial position" and was in a good position to take advantage of what it saw as a recovery in the Australian and New Zealand housing markets, he said.

"What has also given us cause for optimism is that the operating earnings in the first half of the 2010 financial year were 15 per cent higher than for the second half of the prior year. We have had a noticeable pick-up in trading activity in the October to December period of 2009."

Fletcher Building shares were trading at $7.18 today, gaining 2.23 per cent, or 17c in early trading. The company's shares had a year high of $8.56 last October, with a nadir of $5.01 last March.

- NZPA

Results overview
Comparisons are with the prior corresponding period

• Total sales of $3,393 million, down from $3,757 million

• Operating earnings of $271 million, down from $322 million

• Net earnings of $154 million, down from $172 million

• Cashflow from operations up 52 per cent to $317 million

• An interim dividend of 14.0 cents per share with partial New Zealand tax credits

• Interest cover at 5.2 times

• Earnings per share were 26 cents

• Capital expenditure down 53 per cent to $77 million