Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Fletcher shares surge on improved earnings guidance

Fletcher sees earnings growth of up to 22 percent in 2013, shares gain to 13-month high

By Paul McBeth

Nov. 20 (BusinessDesk) - Fletcher Building, the biggest company on the NZX, expects operating earnings to grow by as much as 22 percent in the 2013 financial year as new home construction accelerates and the firm keeps a lid on costs. The shares rose to $7.65, their highest level since October last year.

The Auckland-based company sees operating earnings of between $560 million and $610 million in the year ending June 30, 2013, chairman Ralph Waters told shareholders at their annual meeting today. That includes a $20 million restructuring cost, and would be between 12 percent and 22 percent higher than the 2012 result. Fletcher restated its 2012 earnings to include a $54 million restructuring cost, which it plans to treat as a normal expense item in the future.

"The board believe 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," Waters said in speech notes published on the NZX.

"Any further deterioration in the Australian market in particular, or in other key markets in which Formica operates, may necessitate a revision to this guidance," he said.

The shares rose 3.7 percent to $7.65, and have rallied 21 percent this year.

Fletcher has rejigged its business and executive team since the recent departure of chief executive Jonathan Ling, restructuring its steel business and expanding its Indian laminates unit.

Waters said New Zealand's residential housing activity has improved, with activity in Canterbury and Auckland leading the way, though work elsewhere has been limited and commercial work remains subdued.

The Australian market is continuing to show a decline in new housing consents, and Waters said the company's doesn't believe lower interest rates will be enough to "significantly improve consumer confidence in the short-term."

New home building in the US has improved, though parts of Europe remain difficult, he said.

Chief executive Mark Adamson told shareholders Fletcher will continue to look at international investment opportunities, particularly in Australia, and is building on measures to remove costs.

He flagged logistics and distribution as an area in need of cost-cutting, which may see shared retail outlets and regional distribution centres, and site closures.

Other ways to reduce costs included the creation of global hubs for procurement, logistics and distribution, manufacturing excellence, digital technologies and business services, and sharing administrative functions such as finance, human resources and IT, Adamson said.

Fletcher will invest in its digital capability to open up new and cheaper communication lines with customers, he said.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Postnatal Depression: 'The Thief That Steals Motherhood' - Alison McCulloch

Post-natal depression is a sly and cruel illness, described by one expert as ‘the thief that steals motherhood’, it creeps up on its victims, hiding behind the stress and exhaustion of being a new parent, catching many women unaware and unprepared. More>>


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news