KEY POINTS:
Fletcher Building shares took a hammering this morning after it said it expects a full year net profit between $450 million and $460 million - provided there is no significant change in economic conditions in the rest of the year.
Shares in the company dived 5 per cent when the sharemarket reopened, after the profit forecast.
Fletcher shares fell 48 cents to $8.02. They have fallen 40 per cent from $13.42 on May 24 last year to $8.02. The top 50 index has fallen 16 per cent over the same period.
The company in August last year reported its 2007 year net profit after tax and minority interests rose 28 per cent to $484m.
Fletcher Building's share price has come under severe pressure due to concerns about the housing market and the general economy, put out the forecast after reviewing its April figures.
The forecasts include:
- expected one-off gains, primarily from property transactions, of $58m, an increase of $43m over the prior year;
- a reduction in Formica's US earnings due to the severe downturn in the US markets adversely affecting results by around $21m net of tax;
- restructuring costs and continued additional operating costs from the consolidation of Formica's North American operations, of around $29m net of tax;
- reduced group taxation expense of around $11m.
The company said that with the exception of Formica's US operations, the group had performed satisfactorily.
"After taking into account all of these matters, operating earnings (earnings before interest and tax) are expected to be in the range of $750-$760m.
"While Formica's initial trading and operational results have been disappointing, and conditions in the USA market in particular are tougher than the acquisition assumptions, directors are still confident the synergies and improvements identified on acquisition will be achieved," the company said in a statement.
- NZPA
