Fletcher Building remains cautious
Fletcher Building Limited (FBU) said it remains cautious with respect to trading conditions for the balance of 2010. At its AGM in Dunedin, New Zealand, the company said current analysts’ forecasts for net earnings after tax, excluding unusual items, for the full year are in the range from $261 million to $340 million.
Fletcher said without a sustained recovery in volumes, net earnings would likely be at the lower end of the range mentioned above.
In FY09 the company reported operating earnings before unusual items were $ 558 million, down from $768 million in the prior year.
Chairman Dr Roderick Deane said while volumes in most markets have been relatively stable over the past few months, the company had yet to see any significant signs of a recovery in any of our markets.
“We have felt the impact through all parts of our operations in some shape or form. In particular, we have seen new housing markets fall significantly around the world, and much commercial activity has similarly declined sharply,” Dr Deane said.
“Coupled with a constrained banking system, the effect has been a severely constricted construction sector.”
CEO, Jonathan Ling, said while the downturn in new residential housing has been clearly highlighted the company has greater concerns over the slowdown in the commercial building sector.
”We are starting to see new housing consents pick up from the current low level, particularly in markets like New Zealand and Australia where there is no overhang of existing housing stock,” Mr ling said.
“We believe that commercial activity will, however, take longer to recover.”
Mr Ling added that pleasingly, the strong cashflow performance Fletcher Building saw in the last financial year has continued into the first three months of FY10.
”On top of this, we expect capital expenditure to be well down on the $289 million recorded last year,” Mr Ling said.
”We are targeting stay-in-business capital expenditure of around $130 million this year compared with a depreciation rate of $211 million in 2009.”
The company said it currently has over $1 billion of undrawn bank facilities available to the group, while the board’s present intention is to pay a total dividend for the year of 28c per share, being the annualised rate of the second half dividend in the 2009 year of 14c per share.
At the close of trade Tuesday, Fletcher Building shares were trading at $6.38.
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