Fletcher Building has warned investors of a "mixed" outlook for construction activity in Australia but the dual-listed firm is predicting earnings will be stronger than last year, based on its continuing operations.
The New Zealand and Australian-listed group said it expected operating profit before significant items for the full year would range from $NZ650 million to $NZ690m against fiscal 2015's $NZ653m result.
But the company said the outlook should be compared to a normalised operating earnings result for last year of $NZ610m, which adjusts for sold businesses, such as Pacific Steel and Rocla Quarries, together with earnings streams that are "by their nature" set to decline.
"Therefore, operating earnings in the range of $NZ650 to $NZ690 million will represent solid growth year on year from our continuing business operations,” company chairman Sir Ralph Waters said.
The company said it was expecting strong market conditions in the New Zealand construction industry but the outlook for Australia was "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," Sir Ralph said.
"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."
Meanwhile, the company said it expected overall half-year earnings to be lower than for the prior corresponding period with restructuring costs for Tradelink expected to lower its earnings in its Australian distribution arm and contribute to that result -- although the earnings for that division were expected to lift in the full-year.