Fletcher shareholders get chipper outlook

Demolition work is now under way for the NZ International Convention Centre, to rise in Auckland.

One of our largest listed companies has issued a chipper outlook, forecasting strong construction market conditions to persist throughout next year and an earnings lift to almost $700 million for the June 2016 financial year.

Ralph Norris, Fletcher Building chairman, told around 400 shareholders in Auckland this morning of the extremely robust market.

"We expect the current strong market conditions in the New Zealand construction industry to persist through the 2016 financial year, with ongoing demand for new housing, particularly in Auckland and surrounding provinces, an increase in commercial construction activity off the back of the significant increase in the value of consents and government expenditure on infrastructure to remain at the present healthy levels," said Norris - who has taken over as chairman from Ralph Waters.

Operating earnings before interest, tax and significant items for the June 2016 year will be in the $650 million to $690 million range, he said, compared to the June 2015 year's earnings of $653 million.

But in comparing the two years' performances, he encouraged shareholders to take account of the need to adjust earnings to include the sale of various businesses which he said had resulted in reduced earnings.

Watch Fletcher CEO Mark Adamson talk about today's AGM.

"If we normalise operating earnings for the 2015 financial year to reflect these changes in our business activities, the relevant prior year comparator earnings figure would have been $610 million. Therefore operating earnings in the range of $650 to $690 million will represent solid growth year-on-year from our continuing business operations," Norris said

He cited the end of the Christchurch earthquake rebuild and the completion of Auckland's Stonefields residential development as examples of earnings streams which are now ending.