KEY POINTS:
Fletcher Building, one of New Zealand's biggest companies and the stock exchange's third largest, has announced a 4 per cent profit fall, despite operating earnings growing 10 per cent.
The construction and building materials company, which has alerted the market to expect tougher times, made a full year net profit of $467 million.
Fletcher said there were no "after tax unusuals" in the year to the end of June, compared with $85m in the previous year.
This means net profit after tax and minority interests, excluding unusuals, was up 17 percent from $399m in the previous year.
Chief executive officer Jonathan Ling said record operating earnings, or ebit, were made despite increasingly difficult markets.
The performance of New Zealand and Australian businesses and the European and Asian operations of Formica had been "very pleasing".
A delay in capturing operational improvements identified before Formica's acquisition was disappointing, but Fletcher was still confident it would achieve a significantly improved operating performance in Formica's United States operations, Ling said.
Fletcher bought iconic laminates firm Formica last year for US$700 million (then nearly $1b).
Fletcher said Formica contributed to the full year result of the Laminates & Panels division for the first time, but the result was well below expectations.
A final dividend of 24.5 cents per share will be paid , taking the total dividend for the year increased to 48.5c from 45c.
Fletcher shares closed at $6.43 yesterday down from the year high of $12.99 last October.
Analysts have been expecting a weak result from Fletcher Building this week, as its residential construction and American operations take a big hit.
Three months ago, Fletcher issued profit guidance saying it expected to make $450 million to $460 million.
But analysts at three influential firms issued reports saying they were expecting grim news and figures at the lower end or below.
Andrew Mortimer of Credit Suisse, Emily Behncke and Sally Clarke of Deutsche Bank and Matthew Henry of Goldman Sachs JBWere forecast tougher times for the building materials distributor and manufacturer.
Henry was worried about Fletcher's high exposure to New Zealand's house-construction market and its Formica business in the United States.
The house-building outlook here was among the world's worst, he said, and he forecast a 35 per cent drop in Formica's underlying earnings over the next year. Formica's outlook was highly challenging.
Henry expected Ling to give a $454 million result today.
Fletcher manufactures, distributes and sells materials for the building industry, including wood fibre-based products, cement and aggregates, plasterboard, lumber and aluminium extrusion.
Results highlights
Operating earnings pre unusuals up 10 per cent to a record $768 million.
Net earnings, excluding unusual items, up 17 per cent to $467 million.
- NZPA/HERALD
