Bloomberg News

Fletcher Falls on Weak Housing, Quake Delays: Wellington Mover

February 22, 2012

Feb. 22 (Bloomberg) -- Fletcher Building Ltd., New Zealand’s biggest building products maker, declined the most in four months after saying full-year profit may fall as much as 14 percent because of weak housing markets and delays in earthquake reconstruction.

Profit before unusual items will be between NZ$310 million ($258 million) and NZ$340 million in the year ending June 30, from NZ$359 million a year earlier, the Auckland-based company said in a statement in which it reported first-half earnings before unusuals fell 4 percent to NZ$159 million. The shares fell as much as 4.5 percent, the most since Oct. 18.

Fletcher expects modest increases in New Zealand house- building and no improvement in Australia’s residential property market, which will curb demand for cement, lumber and wallboard. Strong aftershocks in the South Island city of Christchurch, which was struck by an earthquake a year ago today that killed 185 people, have set back reconstruction, Chief Executive Officer Jonathan Ling said.

“Conditions in New Zealand are expected to remain challenging for the balance of the 2012 financial year,” Ling said. “Levels of activity in both the residential and commercial construction sectors will remain subdued.”

Fletcher shares fell 15 New Zealand cents, or 2.3 percent, to NZ$6.49 at 11:05 a.m. in Wellington.

Net income dropped 13 percent to NZ$144 million in the six months ended Dec. 31, the company said. Sales rose 30 percent to NZ$4.51 billion after last year’s acquisition of Australian company Crane Group Ltd. Excluding that deal, sales fell.

Fletcher is reviewing its Laminex unit, which produces wallboard used in bathrooms and kitchens, and incurred NZ$21 million of one-time costs in the six months ended Dec. 31. It expects to incur an additional NZ$40 million to NZ$50 million of costs in the second half, it said today.

The company will also review its insulation business in Australia and New Zealand “to determine what will be required to generate satisfactory returns in the future,” said Ling. This may also result in one-time costs, he said.

--Editors: Chris Bourke, John McCluskey

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

To contact the editor responsible for this story: Chris Bourke at cbourke4@bloomberg.net


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