Building Company Joins List Of Downturn Victims
The Age
Thursday November 13, 2008
NEW Zealand-based Fletcher Building has become another building materials company to shrink its profit guidance as the downturn on both sides of the Tasman has taken its toll on the world's biggest maker of laminated building board.
At its annual meeting yesterday, chief executive Jonathan Ling said the company, which also manufactures gypsum plasterboard, cement, wood-fibre panels and steel roof tiles, could suffer a full-year fall of as much as 38%.Mr Ling said profit before one-time items would likely sit between $NZ289million ($A252 million) and $NZ354million this financial year. This is in line with most analyst forecasts.For 2007-08, Fletcher Building recorded a 4% decline in full-year net profit to $NZ467million. However, that included $NZ80million in residential property sales and the disposal of surplus land assets and quarries. Shares in Fletcher Building ended slightly weaker, down 2 to $4.85. The stock is hovering around a four-year low, having lost more than 50% of its value since January.It is not alone among building materials companies. Last month, CSR blamed the gloomy outlook for the housing market, particularly across Australia's eastern states, for its warning of a flat profit this year. Also in October, Boral managing director Rod Pearse said slowing construction markets in the US and Australia would slash profit by as much as 18% for 2008-09.Yesterday, Mr Ling said the biggest factor in Fletcher Building's earnings warning was a decline in New Zealand's residential market due to the economy being in recession for most of 2008.Fletcher Building makes 50% of its earnings from sales in its domestic market, 30% from Australia and the remainder spread across North America, Asia and Europe.But Mr Ling said there was cause for optimism due to Fletcher Building's growing business in construction and infrastructure projects.
© 2008 The Age
