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Fletcher Building Says Year Profit To Be From $450m-$460m

Fuseworks Media
Fuseworks Media

Wellington, May 20 NZPA - Fletcher Building said today it expects a full year net profit between $450 million and $460 million provided there is no significant change in economic conditions in the rest of the year.

The company in August last year reported its 2007 year net profit after tax and minority interests rose 28 percent to $484m.

The company, whose share price has come under severe pressure due to concerns about the housing market and the general economy, put out the forecast after reviewing its April figures.

The forecasts includes:

- expected one-off gains, primarily from property transactions, of $58m, an increase of $43m over the prior year;

- a reduction in Formica's US earnings due to the severe downturn in the US markets adversely affecting results by around $21m net of tax;

- restructuring costs and continued additional operating costs from the consolidation of Formica's North American operations, of around $29m net of tax;

- reduced group taxation expense of around $11m.

The company said that with the exception of Formica's US operations, the group had performed satisfactorily.

"After taking into account all of these matters, operating earnings (earnings before interest and tax) are expected to be in the range of $750-$760m.

"While Formica's initial trading and operational results have been disappointing, and conditions in the USA market in particular are tougher than the acquisition assumptions, directors are still confident the synergies and improvements identified on acquisition will be achieved," the company said in a statement.

Fletcher shares have fallen 40 percent from $13.42 on May 24 last year to $8.01 yesterday. The top 50 index has fallen 16 percent over the same period.

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