Fletcher Building today announced its unaudited interim results for the six months ended 31 December 2010. The group recorded net earnings after tax of $166 million, 8 percent higher than the $154 million recorded in the prior corresponding period.
Operating earnings (earnings before interest and tax) were $285 million compared with $271 million in the first half of the 2010 financial year.
Cashflow from operations was $202 million compared with $317 million in the first six months of the 2010 financial year. As foreshadowed at the start of the year, inventory levels were expanded during the period to ensure that group businesses are well positioned to respond to an upturn in activity levels. Operating cashflow was also impacted by increased residential land purchase settlements, and the utilisation of restructuring provisions.
The interim dividend will be 16.0 cents per share. In line with the company's recently released advice on its approach to allocating tax credits, the dividend will be fully franked for Australian tax purposes but will not be imputed for New Zealand tax purposes.
Total sales for the group were 2 percent higher at $3,468 million. This was a result of increased volumes in many of the group's Australian businesses, most notably in the laminates & panels and steel products businesses, although insulation revenues were down significantly as a result of the withdrawal of the Australian government insulation subsidy scheme. Volumes were mixed across the New Zealand businesses, but revenues in the distribution and construction businesses were higher and Fletcher Residential house sales were up strongly. Formica continued to achieve good sales growth in Asia but European volumes declined further.
Chief Executive Officer, Jonathan Ling said "This is a strong result in the context of mixed market conditions. In New Zealand the recovery in residential house building activity has stalled, but high infrastructure work levels and good cost containment aided earnings growth. The stronger Australian economy has meant that most of our businesses there have achieved pleasing earnings growth. Beyond Australasia, Formica has continued to lift its earnings through continued growth in Asian revenues and higher North American margins despite flat volumes in that market.
"Overall, this result reflects the group's geographic and product diversity. It is especially pleasing that we have been able to achieve earnings growth of eight percent despite subdued trading conditions in New Zealand and the US, and weakness in many European markets.
"The Canterbury earthquake and continued aftershocks have negatively impacted our New Zealand businesses in the first half of the year, and while we expect a positive impact as repair and reconstruction efforts gain momentum this may not be significant in the second half. Similarly, we have seen business disruption in January as a result of the Queensland and Victorian floods but expect activity to pick up later in the year as rebuilding work gets underway," Mr Ling said.
Results overview
Comparisons are with the prior corresponding period
- Total sales of $3,468 million, up 2 percent from $3,393 million
- Operating earnings of $285 million, up 5 percent from $271 million
- Net earnings of $166 million, up 8 percent from $154 million
- Cashflow from operations $202 million, down from $317 million
- Earnings per share were 27.3 cents, up 7 percent from 25.5 cents
- An interim dividend of 16.0 cents per share, fully franked for Australian tax purposes
- Interest cover at 5.6 times
- Capital expenditure up 95 percent to $148 million inclusive of $52 million of acquisitions. A further $141 million was invested in a 14.9 percent shareholding in Crane Group Limited.
For further information please contact:
Philip King
General Manager
Investor Relations
Phone: + 64 9 525 9043
Mobile: + 64 27 444 0203
ENDS