Fletcher Building FY profit slips

Fletcher said that a slowdown in the mining sector of Australia, where it earns 35 percent of total revenues, had weighed on overall earnings.

Separately on Wednesday, Fletcher said it has conditionally agreed to sell the operations of Rocla Quarry Products to Hanson Construction Materials in a deal valued at about $A203m ($NZ226m). “New Zealand is continuing along as it has”. He expects Fletcher to give guidance at its annual shareholders’ meeting.

A final dividend of 19.0 cents per share will be paid on 14 October 2015, with full New Zealand tax credits attached, bringing the total dividend for the year to 37.0 cents per share.

Revenue rose 3 percent to $8.7 billion. Xero was the worst performer on the benchmark index, dropping 3.5 per cent to $15.24, its lowest level since December.

“Business disposal expenses of $7 million relate principally to the prior year sale of the long steel business with additional costs incurred in the year under the transitional agreements with the purchaser”, Fletcher announced.

“Operating earnings beyond New Zealand and Australia were lower, with continued weak conditions in Europe and a more hard trading environment experienced in China but a strong performance from Formica in North America”. Operating earnings dropped by 17% to US$177m, as weaker trading in Australia offset gains in New Zealand.

He said the strength in residential construction helped its Laminex, Fletcher Insulation and Tradelink businesses, but it has been negatively impacted by a sudden fall in demand for plastic pipes from the coal seam gas sector.

NEW Zealand shares have retreated as investors wait for more companies to report as the country’s gloomier economic outlook hangs over the earnings season. In Australia, distribution revenue fell by 11% to US$826m and operating earnings before one-time items rose 6% to US$18m.

Construction revenue jumped 21 percent to $1.58 billion and earnings before items gained 32 percent to $140 million.

“The result was driven by increased activity levels across most sectors in New Zealand and improved conditions in the USA, partly offset by subdued markets in Australia and Europe”, the company statement said.