Building materials supplier Fletcher Building has had another profitable year with the buoyant times in the commercial and infrastructure sectors strengthening the company’s balance sheet.
For the year ending June 30, 2006, Fletcher Building recorded a net profit after tax of $379 million, compared to $347 million in the previous year.
Fletcher Building achieved operating earnings of $675 million, up 10% on the 2005 year.
A reduction in operating earnings from distribution to $75 million compared to $81 million in the previous year, was more than offset by increases in the other divisions.
Infrastructure’s operating earnings were $255 million compared to $196 million in the previous year, Building Products’ $235 million compared to $227 million in 2005 and Laminates & Panels’ $116 million compared to $107 million in 2005.
For the year, sales were $5.5 billion, up from $4.6 billion in the previous year. This included a full year’s contribution from the Amatek group of companies, compared to four months in the previous year.
After adjusting for this acquisition, sales were 6% and operating earnings 3% above those for the previous year. New residential building slowed in New Zealand and Australia, while commercial building and infrastructure markets remained robust.
The building products division improved operating earnings by 4%. This result includes Amatek companies Stramit and Insulation Solutions for the full year.
The division was adversely affected by slowing residential markets, particularly in New Zealand, and lower global commodity prices for steel.
Fletcher Building chief executive Ralph Waters said the result reflected a more difficult market environment, offset by the benefits of acquisitions and ongoing productivity improvements.
“The results reflected continued benefits from the strategic diversification of earnings undertaken over recent years.
“Whilst residential markets have slowed in both New Zealand and Australia, the commercial and infrastructure markets have made a strong contribution,” Waters said.
“This market diversification, along with our ability to secure further internal improvements, has provided the basis for earnings reliability,” he added.
The lift in earnings enabled a further increase in dividends – from a total 32 cents per share in the previous year to 40 cents per share, with a final dividend of 21 cents per share. Total shareholder return for the 12 months ended 30 June 2006 was 40%.
Looking ahead, Waters said residential markets are continuing to slow in New Zealand, albeit from record high levels, and the Australian states that slowed in 2005 year have not yet shown signs of an upturn.
“Nevertheless, while the company expects more subdued trading in the 2007 year, the strength of non-residential construction and infrastructure in both countries should enable Fletcher Building to report another satisfactory result in the year to June 2007,” he concluded.
By Nelson Yap