NZ's Fletcher Bldg sees 2013 earnings lift, shares rally
WELLINGTON (Reuters) - New Zealand's Fletcher Building Ltd (FBU.NZ) said it expects its full-year earnings to rise at least 12 percent despite a slowdown in the Australian market, pushing its shares to a 13-month high.
Australasia's biggest building products company said earnings were being driven by its strong New Zealand business, while demand in the United States and Asia has improved although Europe remained difficult.
It forecast adjusted operating earnings before interest and tax of NZ$560 million to NZ$610 million ($459 million-$500 million) for the year to end-June 2013, up from NZ$502 million in 2011/12.
"The board believes that this is achievable on the basis of the momentum seen in New Zealand recently, which is expected to continue for the whole of the year," Chairman Ralph Waters told the annual meeting.
Fletcher's shares rose 4 percent to NZ$7.68, their highest since October 2011. Its shares have climbed around 25 percent so far this year, slightly outperforming the benchmark NZX-50 index .NZ50.
Waters warned that the outlook was vulnerable to a downgrade if the Australian building market continues to slow, or if it sees further weakness in its Formica division, which has been hurt by a fall in demand in Europe.
Fletcher Building, which manufactures concrete, plasterboard, laminates and steel building products, earns 47 percent of its earnings in Australia, 37 percent in New Zealand and the remainder in the United States, Europe and Asia.
The company has been stung by weakness in the Australian building market, and reported a 35 percent fall in net profit in 2011/12 to NZ$185 million. It did not give a net profit forecast for 2012/13.
It said it would now account for all restructuring costs within normal earnings rather than as one-off items, leading it to restate its 2012 earnings at NZ$502 million from the previously stated at NZ$556 million.
Waters said earnings were expected to be stronger in the second half. An improvement in residential home building in New Zealand was continuing, while rebuilding activity picked up in Christchurch, which was devastated by an earthquake last year.
The Australian construction market remained challenging, and a series of interest rate cuts would not be enough on its own to lift consumer confidence and kick-start the building industry in the short term, he said.
Asian markets continued to grow, but signs of slowing growth in China were a concern. The company exports mainly Formica and roofing tiles to Asia and has been eyeing growth opportunities in the region.
(Reporting by Naomi Tajitsu; Editing by Richard Pullin)
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