Fletcher Building profits up 8pc to $166m

Jonathan Ling, chief executive of Fletcher Building. Photo / Sarah Ivey

New Zealand's biggest listed company, Fletcher Building, made net after-tax profit of $166 million in the December half-year, up on the previous $154 million.

Fletcher announced its result this morning and chief executive Jonathan Ling said the international business was on target to meet expectations that it would make $313 million-$396 million for the full year to June, with an average of $354 million.

"Assuming no further deterioration in New Zealand construction volumes, robust economic performance in Australia and Asia, and stable markets in aggregate across Europe and North America, we expect net earnings to be within this range of analysts' expectations, and broadly in line with the average of analysts' consensus estimates," he said.

Today's result was pushed up particularly by good performance in the group's Australian businesses, mainly in the laminates/panels and steel products businesses, Ling said.

Ling said the outlook for the full year was mixed due to changing economic conditions around the world, the impact of the Queensland floods and the Canterbury earthquake.

"In New Zealand, residential house building activity is not expected to improve in the second half given the recent consenting data, however, there have been more encouraging trends seen in commercial construction consents.

Work on rebuilding Canterbury following the earthquake in September 2010 will accelerate in the second half of the year. The government's scheme to facilitate the remediation of tens of thousands of leaky homes is now not expected to get underway until the 2012 financial year.

"Infrastructure spending by the Government is forecast to be lower this year due to the timing and implementation of larger projects, but based on Government estimates, will increase in the 2012 financial year.

"In Australia, conditions are expected to remain relatively favourable driven by the continued strength in the mining and resources sectors. However, new housing starts and commercial construction activity levels may weaken in the near term.

Investment in infrastructure is expected to continue around current levels. The consequence of the recent flooding and cyclone damage in Queensland Victoria may cause some negative impact in the current year although repair and rebuilding work should contribute more significantly in the 2012 financial year.

"Further afield, South East Asian markets and mainland China are expected to continue strong growth, while North Asian markets are likely to remain subdued.

European volumes overall are not expected to show growth. Businesses in North America are well placed for any pick up in volumes but there remains considerable uncertainty as to the timeframe for a sustained recovery in the US," Ling said.