Fletcher Building's New Zealand operations underpinned a small revenue gain for its half-year result, but $66 million of goodwill impairment charges and site closure costs dragged down its after-tax profit, from $154 million last year to $114 million.
Following a downgrade for full-year financial guidance, Fletcher shares fell more than 5% after the announcement, to trade around $8.28.
The company's full-year outlook said that earnings before interest, tax (ebit) before significant items, was still expected to be within the range of $650 million to $690 million, but due to the rapid deterioration in the Australian mining and infrastructure sectors, ebit is ''expected to be towards the lower end of the guidance range''.
For its trading year to December, Fletcher's revenue rose 1%, from $4.27 billion a year ago to $4.32 billion. Earnings before interest and tax (ebit) were down 20%, from $281 million to $224 million.
Following the $66 million impairment and closure charges, after-tax profit was down 26%, from $154 million to $114 million.
Fletcher Building chief executive Mark Adamson said the result was driven by strong activity levels in New Zealand, but the Australian mining downturn and reduced government infrastructure spending continued to have a negative impact on Fletcher's results.
The ebit, before significant item charges, in New Zealand grew 20%, from $167 million to $200 million, but in Australia plunged 36%, from $77 million to $49 million.
Craigs Investment Partner broker Peter McIntyre said the result was weaker than expected, and while full-year underlying ebit was reaffirmed, it was at the low end of the $650 million to $690 million range.
''The market is not used to disappointment, [from Fletcher] especially with work in Auckland and Canterbury doing so well,'' he said.
Mr McIntyre said it was a positive that the 18c-per-share interim dividend of last year had been repeated.
Fletcher's Heavy Building Materials ebit declined, from $90 million a year ago to $74 million, due to weak results from plastic pipes, down from $21 million a year ago to a loss of $3 million and its Australian concrete products, down from $14 million to $4 million.
He said the ''low end'' guidance range meant more disappointment was likely, as the positive tailwinds of New Zealand work were being overshadowed by headwinds faced in Australia.
Forsyth Barr broker Andrew Rooney said the profit result was ''broadly in line'' with expectations, but Australia remained a major challenge for Fletcher.
''Additional business rationalisation may be necessary in Australia to right-size capacity, particularly in Heavy Building Products, albeit we recognise that infrastructure investment is likely to pick up significantly over the medium term,'' he said.
Mr Adamson said the New Zealand businesses had continued to perform well and there had been strong demand for products, driven by the buoyant construction market.
''The forward order book for our construction business now stands at $2 billion, reflecting very strong future commitments in both the commercial and infrastructure sectors,'' he said in a statement.
