Fletcher Building not expecting a flash year

Markets for Fletcher Building are "all over the place" and the company is clearly facing a head wind, recently appointed chief executive Alexander Toldte says.

"This year is not going to be a flash year," Mr Toldte said.

He was appointed chairman two months ago, moving from Fletcher Paper, which was sold earlier this year.

The market was mixed in New Zealand, Mr Toldte said.

"The South Island, by and large, is doing very well. There are areas like Wanaka where money seems to be pouring in."

Farmers were buying new equipment and building farm sheds, which was good for Fletcher Building's businesses.

Farmers were enjoying an export boom, with the weak dollar buffering the need for big productivity improvements needed throughout the economy.

"The weak dollar props up our export sector - it is a real shock absorber," Mr Toldte said.

However, the Australian market for building products was weak. Australia had turned down after the Olympic Games boom in Sydney and post-GST.

House building was "really flat."

The Auckland regional market was soft across all the group's businesses. But though residential work was down, commercial construction was quite healthy. Fletcher Building was the preferred partner for the planned new $200 million Auckland Hospital.

It had a healthy backlog of commercial work - the question was the timing of the work rather than whether it happened.

The Reserve Bank had warned of the likely need for interest rate rises next year, but this would depend on the strength of the economy and higher confidence. In that context, even a 50 basis point rise in interest rates would not undermine the construction sector, Mr Toldte said.

Some parts of the business had been hit by higher import prices, especially for steel, because of the low dollar and more expensive fuel.

Fletcher Building is destined to become a standalone public listed company in March after the break up of Fletcher Challenge. Fletcher Building includes residential and commercial construction, steel, building products, and concrete and is a market leader in many sectors of the business.

- NZPA