Fletcher Building yesterday promised to meet rising earnings forecasts and outlined an ambitious international strategy to shift part of its business out of Australasia.
Chairman Rod Deane told shareholders at the annual meeting in Auckland that the company was confident it would meet analysts' forecast after-tax net earnings of $388 million next year, up on this year's $379 million.
The higher profit expectations pushed shares in the building materials and construction giant to a record $10.20 during trading yesterday.
They closed up 13c at $10.18, adding to gains made on Friday following news the firm had been chosen to build the first stage in Auckland's proposed waterfront stadium.
The shares traded as low as $7.18 in January this year.
Jonathan Ling, new chief executive of the ASX and NZX-listed company, outlined Fletcher's expansion plans, but refused to say where it would buy.
Investments in the United States, Malaysia, Hong Kong and the Pacific Islands had been successful for the company so far, he said.
After the meeting, Ling said the company could easily spend $1.5 billion expanding globally and he expected to announce new acquisitions in the next few months.
He told shareholders the company had its eye on a number of opportunities.
"Our financial position with moderate gearing and strong cash flows means we have capacity to make acquisitions where they meet our criteria," he said.
The company was increasingly moving away from New Zealand and 42 per cent of its sales were now made to customers overseas.
Deane said Fletcher's first-quarter earnings were already ahead of last year, but he gave no more details.
The full-year profit forecast depended on resolving insurance issues at Fletcher's Taupo medium-density fibreboard plant and at Pacific Steel in Otahuhu, he said.
A major fire shut the Taupo plant in September. Fletcher has a $10 million excess on its insurance policy for the plant but is yet to settle an insurance payout for loss of earnings and revenue.
An electric arc furnace transformer failure at Otahuhu on October 7 has kept part of the steel business shut.
Shareholders almost filled the 550-seat ballroom at Auckland's Langham Hotel at an event mired by criticism of Fletcher's involvement with Stadium New Zealand. The debate became so heated that Deane eventually banned further questioning, saying the meeting was an inappropriate forum to debate a decision which lay with the Government.
But Deane reassured shareholders Fletcher wanted to be involved in the deal. "We will of course be pleased to participate in the construction side of the project once it is finally determined," he said.
Ling said Fletcher Construction had a $802 million work backlog which did not include construction of the new stadium, expected to be near $500 million.
Key jobs Ling cited were the expansion and refurbishment of Auckland's Stamford Plaza Hotel, construction and extension of the North Shore busway and the Wellington Hospital job.
Asked by one shareholder how long the backlog would take to complete, Ling said the work would take longer than a year and having such a large backlog was healthy for the company.
Bruce Sheppard of the Shareholders Association asked if there were contractual or timing issues with the work backlog. Deane said the company had to take risks to get rewards for its shareholders.
One shareholder, captivated with the amount of building work in the United Arab Emirates' Dubai, quizzed the company about expanding overseas. But Deane said Fletcher had decided it was better to build in this area of the world. The old Fletcher Challenge ran into problems building abroad some years ago, he said.
Sheppard questioned board member Hugh Fletcher, asking what lessons he had learned in his time with the company. Fletcher said he had learned many lessons and in hindsight it was a mistake for the former Fletcher empire to sell its paper division and it was debatable whether it was right to sell the energy division.