KEY POINTS:
Fletcher Building
Fletcher Building (FBU) reported a net profit of $484 million for the year ended June 30, up sharply from $379 million the previous year. The increase of $105 million includes a $70 million one-off taxation benefit. The divisional breakdown indicates just how well diversified Fletcher has become in recent years, with falls in residential property offset by increased activity in infrastructure. The infrastructure division's operating earnings were $271 million (previously $255 million) while building products were $141 million (previously $142 million), and steel $80 million (previously $93 million). FBU is backed by a strong management team with a track record of making value-adding acquisitions. The share has been seriously rerated since the beginning of 2006, its price rising from $7 to around $12.47. Not all of this can be explained in terms of a building boom that would have benefited Fletcher greatly, as a great deal of the growth can be ascribed to aggressive managers making the right decisions at every stage of the cycle.
Babcock & Brown Infrastructure
Babcock & Brown Infrastructure Group (Au:BBI), an Australian owner of ports, gas and power lines, has acquired a majority stake in Terminal Rinfuse Italia for A$92 million. This is its fourth port acquisition in 18 months. BBI said that the acquisition of the 50.3 per cent stake in Italy's largest dry bulk port operator would be cash-flow positive, meaning it immediately adds value for shareholders of BBI. Recent buys will make the distribution to unit-holders more reliable as it reduces the risk of a single asset underperforming. BBI shares are priced somewhat cheaper than Infratil, the closest local equivalent. The BBI price has fallen in recent months but picked up after the latest deal.
* Views expressed in this article are those of IRG, not the Weekend Herald
