Fletcher profit rises on firm foundation

Sharemarket favourite Fletcher Building, riding the tail end of a building boom and a successful acquisition policy, is expected to report another record profit this week.

Fletcher Building said in May that full-year earnings before interest and tax were likely to be between $560 million and $580 million for the year to June 30, up from $460 million a year earlier, and up from a previously forecast range of $525-$545 million.

The latest upward revision was inspired by the company's acquisition of Australia's Amatek on March 1, which is expected to contribute around NZ$22 million in operating earnings.

Fletcher Building was confident the present strength in non-residential and infrastructure markets, particularly in New Zealand, would continue through the June 2006 year.

Dennis Lee at ABN Amro said he would not be surprised to see Fletcher Building exceed its own guidance.

He expected earnings before interest and tax of $575 million, or a net profit of $311 million.

"We see some softening of the sector that is exposed to the residential area, and the area that is more exposed to infrastructure should perform quite well," Lee said.

Rob Mercer, head of research at Forsyth Barr, said the outlook for Fletcher Building remained positive, despite signs of weakness in the residential market on both sides of the Tasman.

"It's still, overall, quite a strong market, particularly in the non-residential sector," Mercer said.

- HERALD ON SUNDAY