Fletcher Building's shareprice tumbles as half-year profit forecast drops significantly

Fletcher Building has warned of a significant drop in its expected half-year profit, just two days before it is due to report formally.

The company's shareprice tumbled nearly 5 percent in early trading, as it said it expected a half-year net profit of about $92 million compared with the previous year's $171m, and well short of analyst expectations of about $126m.

It also warned that its full-year result would be hit by significant costs incurred by the recent upper North Island floods, with its full-year pre-tax earnings now forecast between $800m-$855m, compared with a December forecast of $855m.

"While the underlying performance of the business is strong, trading in New Zealand in January-February has been heavily impacted by the adverse weather events," chief executive Ross Taylor said.

"Market activity and house sales in the remainder of the year [are] expected to be the key driver of our result."

Taylor said softer residential markets were expected to continue into next year on both sides of the Tasman, which would flow through to key parts of its business.

"This lower activity is likely to reduce volumes in our materials and distribution businesses by circa 10 to 15 percent compared to what we have seen in the first half of the current year. And it is likely to mean that house sales in our NZ Residential development business are at similar levels in financial year 2024 to what we expect to deliver this year."

For the six months ended December, which the company is due to report on Wednesday, it said overall revenue was up 5 percent to $4.28 billion, with its materials and distribution divisions doing well but being partly offset by lower earnings in the house building division, as house sales fell.

It said it would have one-off significant items of $360m, including $150m of costs related to the International Convention Centre which is being rebuilt after a major fire.