First roof tiles emerge from Fletcher's new Hungary plant

Fletcher Building has opened its new $20 million roof tile manufacturing plant in Hungary and the first stock rolled off production lines this month.

The plant for subsidiary AHI Roofing is in Varpalota in Hungary's west, a heavily industrialised zone between Budapest and the border with Slovenia.

Chris Ellis, the chief executive of Fletcher's building products division, said the plant's first production was the start of AHI Roofing getting a wider manufacturing presence in markets which were holding up well in the face of the global recession.

This week, analysts also got an insight into the business, hearing how the building division would be strengthened by the Hungarian plant's opening. AHI Roofing was the world's leader in its sector, Fletcher had a 75 per cent share of the New Zealand roofing market and the amount of money generated by the businesses was rising.

AHI and United States-based Decra produced gross sales revenue of $84 million in the half-year to December 2007 which rose to $107 million in the same period to December 2008, although the US business is not expected to do as well this year. Volume, prices and operating revenue were all up between the two periods.

Analysts heard how the business had a strong export performance despite higher steel prices. Although sales volumes had dropped here because new house building numbers had halved, sales to Europe, the Middle East and Africa performed well.

Fletcher said the plant's commissioning in Hungary would allow AHI to give better service to European customers, increase penetration in high-margin markets and allowed for expansion to meet growth expectations in the longer term.

The plant would not hit full production until June.

In late 2007, Ellis went to Hungary and signed the factory deal after examining various eastern European sites. Hungary was the centre of the market for metal roof tiles and the business wanted to minimise freight costs, Ellis said.

Fletcher distributes roof tiles branded Decra in the United States and Gerard in Europe.