Fletcher up despite downturn

Chairman Roderick Deane, left, and CEO Ralph Waters had positive news for shareholders yesterday. Picture / Greg Bowker

The highly profitable Fletcher Building is on target to nail a $637 million return this year, up 7 per cent on last year's earnings.

Chairman Rod Deane reassured more than 300 shareholders meeting yesterday in Auckland that although housing demand had turned down, other sectors were still resilient.

Trading in the first four months to October 30 showed operating earnings "comfortably ahead" of the same time last year.

"For the full year, barring significant unforseen events, directors are comfortable with the average of forecasts for operating earnings by broking analysts which would result in earnings before interest and tax of around $637 million," Deane said.

Fletcher, which has spent $1.6 billion on acquisitions since 2002, had diversified from its reliance mainly on the housing sector and on earnings from New Zealand, he said.

Chief executive Ralph Waters pointed to rising returns and strong commercial and infrastructure construction to bolster earnings as house building here and in Australia slowed.

"I am confident there is still ample scope for continued earnings improvement from Fletcher Building in the years to come," he said.

Fletcher had the ability to buy more businesses with excellent market positions.

But Waters criticised the Commerce Commission's international comparison of cement prices, which claimed New Zealand was the second most expensive country behind Mexico.

The commission published the chart when it delivered its full decision this month on why it barred Fletcher from buying the assets of W. Stevenson and Sons.

The chart quoted prices in United States dollars, but Waters said that if it had been produced two years ago, when the New Zealand dollar was weaker, it would have revealed a quite different result.

Fletcher had spent $70 million on its Golden Bay Cement Portland plant in the past three years and this had improved its efficiency and reduced carbon-dioxide emissions to ensure a negotiated greenhouse agreement was granted by the Government to abate carbon taxes.

Waters was asked why, if cement prices were so high, more businesses were not importing the product?

"Because people can't make a dollar out of it," he replied.