Fletcher Building Ltd., New Zealand’s biggest maker of construction products, fell the most in six months after saying that robust local growth was being offset by a sluggish Australian building market.
House-building in Auckland and earthquake-damaged Christchurch helped boost New Zealand operating earnings by 31 percent in the first half, Fletcher said in a statement today. Its equivalent Australian earnings dropped 12 percent, with overall net income rising 1 percent. Fletcher shares fell 4.8 percent in Wellington, their biggest daily loss since Aug. 22.
“It was a little bit soft and the market’s been pricing in a strong recovery,” said Nathan Zaia, an analyst at Morningstar Inc. in Sydney. “They’ve still got a massive exposure in Australia, which is pretty weak.”
Auckland-based Fletcher’s shares have risen 36 percent over the past year as investors bet on growth fueled by the rebuilding of Christchurch, New Zealand’s third-largest city, which was struck by a series of devastating earthquakes starting in September 2010. Building volumes in Australia were likely to remain weak with no improvement foreseen in the second half, the company said.
Fletcher’s shares fell 45 cents to NZ$8.87 at the 5 p.m. close of trading in Wellington. They earlier fell as much as 6.7 percent.
Operating earnings for Crane Group, the Australian company that Fletcher bought in 2011 for A$797 million ($825 million), fell 26 percent in the first half. That was driven by lower earnings in the Australian distribution units, according to the statement. Crane’s New Zealand revenue rose by 27 percent.
“In recent years, Australia has had an unprecedented economic boom,” Chief Executive Officer Mark Adamson said on a conference call with reporters. “It is unique, certainly in the 20 years I can track back to, that the New Zealand economy is more favorable than the Australia economy.”