At first glance, Fletcher Building's first-half results were awful and even worse than analysts had been expecting.
But the market took heart from the company maintaining its guidance for the full-year results and from its explanations for why the second-half result should be even better than it usually is - the company's earnings tend to be weighted to the second half.
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Fletcher said the benefits of its work on removing costs from its Australian operations should start flowing in the second half, that it expects its steel business will rebound from barely breaking even in the first half and it expects its residential division will sell more houses in the second half.
And investors were relieved there weren't any nasty surprises lurking, such as further write-offs on high rise projects or on the Puhoi to Warkworth highway project.
That's why Fletcher shares initially fell 2 cents to $5.16 but then recovered through Wednesday to close at the day's high of $5.41.
Michael Sherrock, a portfolio manager at Nikko Asset Management, said he had been relieved to see no further project write-downs and that the share price had been weak going into the results with investors obviously fearing the results would disappoint.
The shares traded as high as $5.70 in late January, their highest price in 12 months.
Chief executive Ross Taylor reiterated for the umpteenth time that the provisions for the Building + Interiors unit's losses from high profile projects such as Christchurch's justice precinct, the Commercial Bay project at the bottom of Auckland's Queen Street and the ill-fated SkyCity convention centre and hotel remain contained within the provisions announced in 2018 - the company lost nearly $1 billion on these and other projects.
Taylor was also reassuring that he expects insurance to cover the disruption caused by the fire at the convention centre in October.
He also said the Puhoi to Warkworth project remains on track.
Craigs Investment Partners head of research Grant Swanepoel took Taylor's announcement he plans to sell the Rocla concrete pipes business in Australia by the end of this calendar year as a positive sign.
"It's one of the more positive things from the result. They're trying to improve return on capital rather than trying to build bigger and bigger franchises," Swanepoel said.
The business is clearly small and its sale won't realise any significant sum, although the company did shine a spotlight on it at last June's investor day, saying its revenue in the year ended June 2018 had been $265 million and that it had a 20 per cent share of a $1.2 billion market in Australia.
Fletcher's Australian revenue in the latest six months, roughly a third of total group revenue, was $1.43 billion, down from $1.52 billion in the previous first-half.
The decision to sell Rocla is different from Fletcher's decision to sell Formica. It had been forced to sell that business to help repair its balance sheet – that sale was completed on June 3 last year for $1.19 billion, realising a $122 million net loss on book value.
Taylor told analysts the Rocla and another similar business that it's keeping, Iplex, had experienced an unexpectedly tough six months.
While the Australian government has an extensive infrastructure programme in place, "the usual things we bid on in those businesses just didn't materialise," he said, adding that he isn't expecting a "reset" for some time.
The company's bottom line for the six months ended December fell 8 per cent to $82 million and included $35 million of costs associated with trying to right its Australian operations.
Earnings before interest and tax before significant items fell 11.7 per cent to $219 million and the company is expecting annual ebit between $515 million and $565 million compared with adjusted ebit of $549 million the previous year.
Forsyth Barr analyst Matt Henry said the result wasn't as bad as it looked because of the "inherently variable" results from residential sales and development.
Land development profits of $11 million for the first half are likely to swell to $35 million-plus in the second half, Fletcher said.
And residential sales, which yielded first-half ebit of $27 million, have been ramping up from 11 a week in the first quarter to 23 a week in the second quarter.
Fletcher is targeting 800 to 900 sales of residential units for the full year, up from 755 the previous year.