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Fletcher Building Limited : High New Zealand Dollar a Headwind for Fletcher Building but Local Rebuild Activity Boosts

10/15/2013 | 09:43pm US/Eastern
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   By Rebecca Howard 
 

WELLINGTON, New Zealand--Fletcher Building Ltd. (FBU.NZ) said Wednesday that the strong New Zealand dollar is proving a significant headwind, but it expects increased construction activity across the country to boost its 2014 operating earnings.

Fletcher Building is benefiting from the NZ$40 billion (US$34 billion) rebuild in Christchurch after a series of devastating earthquakes, and "we expect a further increase in construction activity levels across most sectors in New Zealand in the 2014 financial year," Chairman Ralph Waters told the annual general meeting.

Among other things, "the repair of houses and infrastructure in Christchurch will continue to boost activity levels," he said. Mr. Waters was less optimistic about Australia though, saying "there has been no noticeable improvement in volumes since the new financial year began and our prognosis for the year is for relatively flat conditions."

The company expects earnings before interest and tax of between NZ$610 million and NZ$650 million, he said. That compares with operating earnings of NZ$569 million in the 2013 financial year.

Mr. Waters warned, however, that the strong New Zealand dollar against the Australian dollar could cost it around NZ$15 million if the current exchange rate is maintained. The Kiwi is up 11% this year, at A$0.8809.

Fletcher's shares were up 1.2% at 0123 GMT, against a 0.2% rise in the NZX-50.

Write to Rebecca Howard at rebecca.howard@wsj.com

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