Fletcher Building is expecting a revenue boost to almost $10 billion for its full-year result, in the wake of its successful more-than-$1 billion takeover of Australian company Crane Group.
In an investor presentation released yesterday, Fletcher said revenue was expected to rise from $6.8 billion to $9.8 billion for its full-year, to June, result.
Its earnings before interest and tax would rise 18% from $521 million to $616 million, "due primarily to the purchase of Crane".
Fletcher's $A800 million ($NZ1.077 billion) bid for Crane, in cash and script, went unconditional late last month.
However, Fletcher also issued some caution, noting residential building in New Zealand and Australia was "not expected to improve" and "may weaken" during 2011, and infrastructure spending in general was expected to dip before growing again next year.
"Canterbury earthquake repair work will be significant beyond 2011," Fletcher said.
Forsyth Barr broker Tony Conroy said while Fletcher faced several short-term earnings risks, the medium-term outlook towards 2013 was "very positive".
"In the near term, Fletcher's share price has rallied strongly, and looks fully priced given the ongoing near-term challenges," Mr Conroy said.
Craigs Investment Partners broker Peter McIntyre said he expected Fletcher's share price would be re-rated by investors with a 50c-$1 gain on the share price.
He highlighted the Crane purchase would further underpin Fletcher's status as New Zealand largest company, which would garner more interest from large institutional investors.
Mr Conroy said future building activity attached to the Christchurch earthquake would create a "timely boost to underlying activity" that Forsyth Barr had assessed to be worth about $244 million to Fletcher, through $20 billion of work spread between 2012 and 2019, and Fletcher's gaining a 20% market share of the total spend.
Mr Conroy said there was also positive potential to be gained by Fletcher from the Crane takeover, and also its role in leaky-building repairs and rebuilding after the Queensland floods.
A decade ago, 12% of Fletcher's revenue was from Australia and 87% from New Zealand, but expectations for the full year are 45% from Australia and 42% from New Zealand.
Rest-of-world contributions are expected to have grown from 1% a decade ago to 13% this financial year.
