Pause in reconstruction job hits Fletcher earnings

Philip King of Fletcher Building. Photo / Supplied

Fletcher Building's earnings this year will drop after the Christchurch earthquake.

The company, releasing one of its first earnings downgrades since listing in 2001, will make $14 million to $24 million less than expected.

General manager of investor relations Philip King said the huge rebuild and reconstruction work would have a short-term negative impact on earnings with a long assessment and planning phase.

Fletcher said last month it would meet analysts' forecasts of $313 million to $396 million net after-tax profit for the June 30, 2011 year.

Forsyth Barr's Rob Mercer and Goldman Sachs' Matt Henry had upgraded Fletcher's longer-term earnings outlook after the quake, with Henry expecting $333 million this year, $393 million next year and then $513 million.

Fletcher is in the midst of a $1 billion takeover bid for Australasian plumbings supplies and plastic pipeline maker Crane Group.

Last month, Fletcher chief executive Jonathan Ling said the construction division's forward order book stood at about $800 million. It has been running hotter at $1 billion-plus.

Fletcher is shortlisted for the biggest planned motorway job. NZ Transport Agency named it with arch-rival Leighton Contractors for the 4.5km, $1.7 billion Waterview Connection linking the Southwestern Motorway to the Northwestern Motorway at the Great North Rd Interchange. That includes plans for New Zealand's longest tunnel, on 2.5km of the route, although questions were being asked about that after the earthquake.

Fletcher won the Stage Highway 20 Manukau job and the Central Motorway Junction upgrade in Auckland, and the Victoria Park project, but Leighton won the Albany-to-Puhoi job.

In a separate move, the Commerce Commission yesterday cleared Interpipe Holdings, trading as Waters & Farr, to buy Fletcher Concrete and Infrastructure's vertical drycast technology concrete pipe plant in Hamilton.

Fletcher also announced yesterday it would donate $5 million to Christchurch.

Shares closed up 10c at $8.81.