Growth in Australia lifts New Zealand’s Fletcher Building
As it appeared in 
Fletcher Building said the residential construction market was “the bright spot across the industry”.
New Zealand construction giant Fletcher Building reported a 5 per cent rise in earnings before significant items for the 2016 fiscal year, driven by the strong performance of its Australian business and growth in its distribution, residential and construction divisions in New Zealand.
The company said the residential construction market was “the bright spot across the industry” over the last financial year in Australia, but it noted the mixed outlook for the nation’s housing sector.
“In Australia, we expect stand-alone housing construction in the eastern states to remain steady at current levels, but expect apartment construction to start to ease,” chief executive Mark Adamson said, noting the company did not hold a significant exposure to the apartment market.
“About half of our earnings are from the stand-alone housing market, so we are keeping a watchful eye on that; it’s been strong but steady so we are reasonably confident about the near-term outlook.”
Fletcher Building reported net earnings of $NZ462 million ($437m) for fiscal 2016. After significant items, net earnings came to $NZ418m, 5 per cent higher than the $399m recorded in the previous year and towards the top end of its guidance.
The result was partly driven by a 29 per cent uplift on operating earnings from its Australian businesses, Mr Adamson said. “The 29 per cent growth rate was achieved through stronger performances in a number of our businesses, despite a relatively subdued economic environment,” he said.
Stramit and Fletcher Insulation recorded strong operating earnings improvements, while Iplex improved during the year and traded profitability in the second half. The company also had strong growth in operating earnings for its businesses in NZ, where it also develops property.
“(Over) the past year, we’re seeing residential consents continue to rise against the backdrop of rising net migration into New Zealand and strong house price appreciation across most parts of New Zealand,” Mr Adamson said.
Multi-dwelling construction was a more significant feature of the housing market, particularly in Australia, he added.
The company also completed a portfolio restructure, selling Rocla Quarries in January and buying Higgins last month.