After a six-year golden run on the back of the housing boom, Fletcher Building has struck it lucky yet again with an expected $70 million windfall.
The resolution of an tax issue yesterday would substantially boost its annual result, the company said.
Fletcher will make around $458 millionin the year to June 30, 2007 instead of the previously forecast $388 million, giving an immediate 18 per cent profit upgrade.
Fletcher building shares rose 10c to a record $11.78, although they traded as high $11.90 during the day.
Chief executive Jonathan Ling said yesterday the $70 million boost would significantly reduce borrowings.
Analysts said the extra money was a one-off gain and very positive for Fletcher but warned that it was only for the current year's profit.
Fletcher has had a stellar run this decade. Its share price has rocketed and its earnings increased on the back of the super-heated building market. The stock has risen 42 per cent since September.
Rising demand for construction materials, housing and infrastructure have helped push the company ahead.
Ling said the $70 million was not fully provided for in the current year's earnings because an Inland Revenue Department audit was pending.
This audit was sparked by a dispute which centred on some of Fletcher's foreign sourced earnings, he said.
However the department had now told Fletcher that no further action would be taken, Ling said.
"The tax benefit will now be fully recognised, so increasing net earnings for the June 30 year by $70 million. At this stage it is anticipated that tax benefits of this nature will be non-recurring," Ling said.
In February, Ling announced that Fletcher was on target to meet the $388 million full-year result which was the consensus of analysts' forecasts.
