Fletcher Building Drops Most in 14 Years After 1st-Half Profit Outlook Cut
Fletcher Building Ltd. (FBU) slumped the most in almost 14 years after New Zealand’s largest construction company said first-half profit is likely to fall 10 percent from a year earlier because of weak residential and commercial markets in New Zealand and Australia.
“In New Zealand, no material improvement in trading conditions is expected in the first half and the timing of a sustained and meaningful recovery beyond that is uncertain,” the Auckland-based company said in a statement. “In Australia, there is a clear risk that residential and commercial construction activity will remain around the current low level for the balance of the 2012 year.”
Fletcher shares tumbled 98 cents, or 12 percent, to NZ$6.92 at the 5 p.m. close, extending its loss the past six months to 26 percent. It was the biggest fall since Oct. 28, 1997. The benchmark NZX 50 index fell 2.1 percent.
Recent increases in building approvals are yet to flow through to housing starts, while there is a delay to reconstruction of Christchurch where earthquakes the past year have wrecked homes, shops and office blocks, the nation’s largest supplier of wall board, timber and cement, said
Net income in the six months ending Dec. 31 is likely to be less than the NZ$166 million ($130 million) in the year-earlier period, Fletcher said.
Still, full-year profit excluding unusual items is expected to be similar to NZ$359 million in the 12 months ended June 30, 2011, reflecting the inclusion of Crane Group which was acquired earlier this year, it said.
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