Building lifts profit by 170pc

By Libby Middlebrook

A strong residential construction market helped to push up Fletcher Building's earnings by more than 170 per cent in the six months to December last year.

The division's net profit for the half-year was $46 million, against $17 million for the same period in 1998, lifting the dividend payout 33 per cent to 8c.

Chief executive Terry McFadgen said residential construction was expected to weaken, but increasing non-residential and commercial construction during the rest of the year would support growth in Fletcher Building.

He said the number of new houses being started was at 26,000 a year, "and most commentators would say that's not sustainable.

"We expect the big softening in that market to be more than offset by growth in the commercial market."

The six-month result reflected a doubling in earnings from operations from $40 million between July and December 1998 to $81 million in the six months to December 1999. Operating revenue fell 2 per cent from $1.30 billion in 1998 to $1.28 billion.

Restructuring cost the company about $8 million, and reducing the scale of its Chinese steel operation and the sale of Fletcher Aluminium's Hamilton site cost another $8 million.

Net earnings rose to 11.7c a share in the six months to December 1999, from 2.8c in 1998.