Fletcher Slumps on Earnings Slide, Unit Review: Wellington Mover
Fletcher Building Ltd. (FBU), New Zealand’s biggest construction-products maker, fell the most in 10 months after full-year profit tumbled 35 percent and the company announced an internal review to boost efficiency.
Net income slumped to NZ$185 million ($150 million) in the year ending June 30, from NZ$283 million a year earlier, the Auckland-based company said in a statement. The stock fell 5.1 percent, the biggest drop since Oct. 18.
Profit declined amid weak housing markets in New Zealand and Australia while the company incurred one-time costs from closing plants, firing workers and adjusting the value of units to recognize weaker future earnings. A review of operations across all of its New Zealand operations will be conducted by Mark Adamson, who replaces Jonathan Ling as chief executive officer from Oct. 1.
“The whole portfolio is under examination,” Adamson said on a conference call. “I think our capacity is reasonably in balance. It’s more about driving efficiency from those business units, and that could lead to more products, more services rather than job cuts.”
Fletcher shares declined 34 cents to NZ$6.32 at the 5 p.m. market close in Wellington.
The company didn’t provide an outlook for the 2012-13 year, saying it would require a “marked improvement in residential and commercial construction levels, particularly in New Zealand and Australia” to achieve any significant increase in earnings.
New Zealand home building is forecast to increase, but commercial construction is not expected to improve materially, Adamson said. In Australia, there is a risk that home building will slow further, he said.
Sales rose 20 percent to NZ$8.87 billion after last year’s acquisition of Australian company Crane Group Ltd. Excluding that deal, sales declined.
Full-year earnings excluding one-time items dropped 12 percent to NZ$317 million, at the low end of a range provided by the company in February and near the NZ$315 million average forecast of 10 analysts, according to data compiled by Bloomberg.
Net income included NZ$132 million of one-time costs associated with the closure of Fletcher’s Formica plant in Spain, a review of its Laminex unit where 285 jobs were cut in Australia, and a reduction in the value of the Australian insulation business based on a weaker earnings outlook.
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