Fletcher Building booked more than $100 million in one-off costs for its full-year to June result yesterday, but managed to beat analysts' expectations to deliver an improved after-tax profit of $359 million.
After-tax profit rose 19.2% from $301 million last year to $359 million on a 9% increase of turnover at $7.416 billion, while Fletcher had to book $108 million (pre tax) in one-off unusual costs.
Chief executive Jonathan Ling said result was driven by the strong performances of its Infrastructure and Laminates and Panels divisions, further underpinned by the inaugural contribution from Australian acquisition Crane Group, which delivered $623 million in sales and $29 million in operating earnings.
Fletcher, which confirmed a full-year dividend of 33c yesterday compared to 29c last year, saw its shares initially rise almost 2% to $7.92 after the announcement, then eased back.
Craigs Investment partners broker Peter McIntyre, who picked after-tax profit up 9% to $327 million, said the result was "solid", but of "critical importance" was the lack of any financial guidance usually expected from Fletchers.
"They have outlined Asia as a growth area which will feed in, [financially] but there remains uncertainty over the pace and timing of recovery in New Zealand," he said.
Mr Ling said the outlook in New Zealand was for a "gradual improvement" in new housing, but from a low base, and Christchurch rebuilding would gain momentum during the year, but commercial activity remained "patchy".
Australian housing was expected to remain at "reduced levels and commercial activity "subdued", while Asian activity "remains positive" for the region.
Forsyth Barr broker Tony Conroy, who picked after tax profit up 8% to $325.9 million, said the second half of the year was more challenging because of deterioration in New Zealand's residential construction market and issues surrounding Christchurch's rebuilding.
" In Australia, Fletcher's operations performed well, with the exception of Insulation, which has incurred further abnormal costs due to write-downs to inventory and goodwill," Mr Conroy said.
The $108 million unusual costs, ($76 million after tax), were associated with the Crane acquisition and restructuring ($19 million), Australian and New Zealand insulation inventory and plant write-down ($34 million), adjustment to insulation asset value ($46 million) and adjustment to Otago-based O'Brien's bench top business ($9 million).
Some of the provisioning was in response to the Government eliminating building depreciation and reduction in corporate tax from 30% to 28%.
Mr Ling said the operating earnings of the Infrastructure division, including property activities, were up $21 million to $185 million, driven by operational improvements and efficiency gains, plus higher earnings from residential house sales.
A total $747 million of new construction work was awarded during the year, with a backlog of $764 at year-end, but construction operating earnings were down 5% at $37 million. The amount of work to be undertaken in Christchurch was "yet to be accurately determined", Mr Ling said.
