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Fletcher Building Annual Shareholders' Meeting
Fletcher Building chairman Sir Ralph Norris today addressed shareholders at the company’s annual meeting and provided financial guidance for the financial year ended 30 June 2016. The following commentary on the operating and financial outlook for the year was provided at the annual shareholders’ meeting, and the additional commentary below is provided to support that guidance.
Outlook
"We expect the current strong market conditions in the New Zealand construction industry to persist through the 2016 financial year, with ongoing demand for new housing particularly in Auckland and surrounding provinces, an increase in commercial construction activity off the back of the significant increase in the value of consents, and government expenditure on infrastructure to remain at the present healthy levels.
"In Australia, the outlook is more mixed. Residential construction activity may slow particularly in the multi-dwelling segment, while stand-alone housing should be more resilient to potential changes in foreign capital inflows. Commercial construction activity is unlikely to lift from current levels. Continued federal and state government fiscal deficits are likely to mean that infrastructure activity is further constrained.
"Residential and commercial construction activity levels in North America are expected to remain broadly consistent with the past year. European conditions are likely to remain mixed with a generally weak economic outlook. Further volume growth is expected in South East Asian markets but market conditions in China are likely to remain highly competitive.
"In terms of financial guidance, we expect operating earnings, that is earnings before interest, tax and significant items, to be in the range of $650 million to $690 million. This compares with operating earnings of $653 million earned in the prior year
"In comparing year over year performance, it is important to adjust for those businesses that we have sold, such as Pacific Steel and Rocla Quarries, together with other earnings streams which by their nature are set to decline such as EQR and the Stonefields residential development.
"If we normalise operating earnings for the 2015 financial year to reflect these changes in our business activities, the relevant prior year comparator earnings figure would have been $610 million. Therefore, operating earnings in the range of $650 to $690 million will represent solid growth year on year from our continuing business operations," Sir Ralph said.
