Fletcher Building in $93m turnaround

By ANNE GIBSON and NZPA

Fletcher Building outstripped market expectations yesterday with a $93 million profit announcement, timed to coincide with news of quitting a disastrous South American venture.

Chief executive Ralph Waters yesterday unveiled $205 million of earnings before interest, tax and unusual items, $5 million ahead of his predictions for the June year.

The Australian who steered the business around from last year's $272 million loss has outperformed his own promises. The market was yesterday expecting profit of only $85 million.

Waters' coup was to announce the sale of its Bolivian concrete operations to South American cement producer Soboce for $21.9 million, exiting what he called a "disappointing area with weak market conditions and an uncertain outlook".

Waters hopes eventually to sell Fletcher Building's Peru cement investment also.

Fletcher Building will pay an 8c dividend on November 14, taking the total payout for the year to 14c a share, compared to 12c last year.

Yesterday's result from $2.97 billion revenue came from a 47 per cent increase in earnings from building products, a 94 per cent rise in earnings from concrete operations, a 500 per cent increase in construction earnings and an 89 per cent rise in earnings from distribution.

Total operating revenue rose 30 per cent and operating profit before unusual items and tax rose 166 per cent.

Fletcher Building shares fell after the announcement, closing down 7c at $2.85.

Brokers said there were several reasons for the fall including a weak overall sharemarket, unfulfilled speculation of a share buyback or increased dividend, and a strong run-up to the result.

Waters yesterday emphasised that Fletcher Buildings' operations are mainly in the building materials manufacturing and distribution area, enhanced by its ownership of the Placemakers chain.

The sale of concrete and building products accounts for 70 per cent of the business. Distribution is only 20 per cent and construction just 10 per cent.

Fletcher Building