Fletcher sees pick-up in 2011 profit

Canterbury rebuild, fixing leaky homes to drive demand, Fletcher says

Nov. 17 (BusinessDesk) – Fletcher Building Ltd says rebuilding Canterbury after the earthquake and the government programme to fix leaky homes will be the impetus for growth in the construction industry.

New Zealand’s biggest construction company said 2011 profit may meet the average of analyst forecasts at around $357 million. Still, chairman Ralph Waters noted forecasts ranged from $311 million to $405 million, reflecting a wide range of macro-economic forecasts, especially in New Zealand. Profit was $301 million last year, excluding a one-time tax charge.

Trading in the first four months of the year was in line with budget and ahead of the same year-earlier period, he said.

The earnings guidance assumes “continued gradual improvement in New Zealand construction volumes, robust economic performance in Australia and Asia, and stable markets in aggregate across Europe and North America,” Waters told shareholders at their annual meeting in Auckland.

Shares of Fletcher fell 1% to $7.86 and are down 5% in the past month. The stock is rated ‘outperform’ based on the consensus of 11 analyst recommendations compiled by Reuters.

The cost of repairing 40,000 to 80,000 leaky homes is estimated at $11 billion, with the government’s scheme expected to come into effect in 2011. In Canterbury, the company has been selected to project manage some 50,000 repairs to residential properties for the Earthquake Commission. The repairs are in the range of $10,000 to $15,000 apiece.

Fletcher is also in a joint venture with McConnell Dowell that is negotiating with Christchurch City Council for infrastructural repair work valued at $190 million.

(BusinessDesk)

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