Fletcher running ahead of forecast

By ANNE GIBSON

Fletcher Building is confident it will beat profit forecasts made just two months ago as a surge in infrastructure spending helps offset the slowing housing market.

Chairman Roderick Deane told about 300 shareholders at the building materials company's annual meeting in Auckland yesterday that full-year earnings would easily surpass the $460 million made last year.

"After four months of trading, the company is comfortably ahead of last year - to the extent that, even after assuming there will be a second-half slowing, directors now expect the full-year earnings before interest and taxation to be in the range of $475 million to $500 million, compared to $460 million last year," he said.

Shares in Fletcher Building, which said in August that earnings would be maintained at last year's level, rose 12c yesterday to close at $5.78. They are up 36 per cent over the year.

Deane said the company was more broadly based and less reliant on residential building and the New Zealand economy.

Strong markets in non-residential and infrastructure building here and in Australia left it even better placed because it had "major positions" in cement, steel and construction.

With a matching pair of giant electronic screens showing bar graphs which only went up, Deane fielded just four questions - all of which began by congratulating the board on its performance.

He returned the compliments, praising the Shareholders Association for its "excellent relationship" with Fletcher Building.

An association representative asked what the company was doing about research and development.

Chief executive Ralph Waters said he could talk for 30 minutes on the topic, but shortened his answer to say innovations in concrete and steel meant the use of materials had changed.

He said a relationship with an Australian university could come to fruition in a few years' time.

Another shareholder asked what Fletcher Building was doing to solve the skills shortage. Waters said it had assisted 37 British engineers and quantity surveyors and their families to migrate here in the past year alone and would look further afield.

To a question about apprenticeship training, Waters replied: "We do a lot with graduates, taking them into programmes but I don't think single-handedly we can feed the country and one of the problems is that we train people who populate our competitors in the construction game."

Three board members, Paul Baines, Ralph Norris and Sir Dryden Spring, were re-elected to the board.

Big spender

Capital spending - how Fletcher Building is investing in the future:

Spending $70 million on upgrade of Golden Bay Cement plant.

Spending $44 million on new or improved PlaceMakers stores.

Earmarking a further $100 million to improve existing businesses.

Fletcher Building