Fletcher Building profit drops 20pc

Photo Natalie Slade.

NZX listed building and materials giant Fletcher Building pushed up revenue 3 per cent from $8.4 billion to $8.6 billion for the June 2015 year.

Full-year profit dropped 20 per cent after $150 million one-off charges including impairment of goodwill relating mainly to the Australian businesses, site closure costs and the sale of businesses.

Fletcher said $78 million of goodwill was impaired in the year: $32 million related to the Forman businesses, $30 million to Stramit, $15 million to Tasman Insulation and $1 million to Humes.

"The impairments are largely attributable to a reduction in the future earnings prospects of these businesses," the company said in a statement.

"Site closure costs of $65 million were recognised in the year relating to the closure of the Crane Copper Tube business and site closures in Iplex Australia, Stramit, Humes and the Forman businesses.

"Business disposal expenses of $7 million relate principally to the prior year sale of the long steel business with additional costs incurred in the year under the transitional agreements with the purchaser," Fletcher announced.

Fletcher's New Zealand revenue rose 10 per cent, the rest of the world 3 per cent but as expected, revenue from Australia fell 5 per cent.

Accounts just out showed EBIT fell from $592 million to $503 million.

Net earnings fell 20 per cent to $270 million and earnings per share were down 20 per cent to 39.2cps.

"In New Zealand, earnings continued to benefit from an increase in construction activity and continued strong demand for houses in Fletcher Building's residential developments," the company said in a statement.

"Consents for new houses in New Zealand of 25,154 increased 8 per cent over the prior year, the highest level since 2007.

"The positive revenue growth in New Zealand, along with cost reduction and efficiency measures, drove operating earnings before significant items 24 per cent higher to $449 million," Fletcher announced.

"In Australia, the continued strength of the residential construction market assisted strong performances in our laminates and panels, insulation and distribution businesses.

"Residential consents increased by 10 per cent to reach record levels. Conditions continued to be challenging in the infrastructure and mining sectors, with significant decline in activity, competitive pressures in the coated steel business and a notable decrease in demand for plastic pipes from coal seam gas projects," it said.

"In the rest of world, market conditions varied geographically with most markets experiencing strong competition and price pressures. Operating earnings in Formica North America increased by 14 per cent, benefiting from improved prices and operating margins.

"In Asia, activity increased in all key locations with the exception of China where there were weaker market conditions and strong competition. In Europe, challenging economic conditions in Central Europe and Russia continued to put pressure on earnings."

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