Fletcher House is built on hard times

Fletcher Building Ltd [FBU.NZ] will be one of the biggest recipients of the New Zealand Government pulling out all the stops to get infrastructure built to "stimulate" the economy and whatever your political views on Government economic stimulus', as a shareholder you would have to be pretty pleased with taxpayer dollars coming Fletcher's way.

Fletcher Building made much of the fact earlier this week when releasing their latest profit result that they are now celebrating their 100 year anniversary.

This is clearly significant because over this time the company has weathered countless recessions, a depression and two world wars.

During the Great Depression, Fletcher Building constructed buildings such as the Auckland Civic Theatre, The Auckland University Arts Building and Wellington Railway Station.

In the late 1930s Fletcher's mobilised themselves quickly enough to become the dominant force in the newly created "government housing" sector and when WW2 hit they ameliorated raw material supply problems somewhat by simply manufacturing their own building products.

My point is here that they manged to get through the depression, so far the worst economic downturn in living memory, there is no reason to believe that they cant do the same during this big downturn.

As at 6:15 pm, 13 Feb


To a certain extent the bad times have made the company what it is now and as history repeats itself Fletchers are set to build from this once again and move towards another upturn.

I have pointed out before that every cloud has a silver lining and in Fletcher's case it is infrastructure.

Even before the big downturn that started in September 2008 and the recession that bit in New Zealand in January 2008, Fletchers had a massive backlog of commerical and infrastucture building on their books.

Thanks to cash being thrown at infrastructure in New Zealand, Australia, America and other markets that they operate in, that list of infrastructure is going to grow.

In fact Fletcher Building is somewhat of a barometer when it comes to the health of the economy as a whole.

Building companies are the first to feel the effects of a downturn and the first to show the inevitable turnaround.

Fletcher Building's profit announcement last week was as expected, marked down, and the outlook for the next year looks uncertain at the moment but as I said earlier the money being thrown around in Fletcher Buildings operating markets looks set to push them through the hard times.


Fletcher Building @ Share Investor

Fletcher Building down tools in the short term
Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Building raises profit through canny management
Fletcher's got game


Related Reading

Fletcher Building History - Auckland University


Celebrating 100 Years of Fletcher
From neighbourhoods to nations
Click here to learn more about our heritage


Fletcher Building Financials

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities
• Half Year Results Presentation.pdf ( 1.00 KB )
  

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c Share Investor 2009

Fletcher Building down tools in short term

Like any other companies operating in the current market Fletcher Building Ltd [FBU.NZ] is going to find the next 18 months or so very hard.

It has already forecast a much lower profit guidance of $289 million to $354 million for FY 2009, such a wide ranging forecast because of extreme uncertainties in the market in which the company operates.

The domestic housing markets in which it operates in; New Zealand, Australia and the USA are experiencing major downturns and that construction downturn coupled with the associated slowdown in supplies of their building materials to said construction is having a big impact on revenue and of course profit.

In my opinion this is likely to get considerably worse before it gets better and shareholders probably wont be seeing anything positive coming out of these domestic housing markets until well into 2010-well later if governments in those countries make the economy worse.

Having said that there are bright spots for the company.

Fletchers has a long list of major infrastructure projects currently underway, especially in Auckland; with Mount Eden Prison upgrade, the Eden Park redevelopment, the Manukau Harbour Crossing(PDF)and the New Lynn Rail Trench among them and a backlog of other infrastructure work in the wings.

The newly elected National Government have also indicated an emphasis on State funded infrastructure projects to help New Zealand get out of its deep economic funk and hundreds of millions in contracts are bound to come Fletchers way in the next year or so.

Australian and American Governments have also indicated a preference to concentrate on crumbling infrastructure to kick their economies along as well.

All this bodes well for their commercial construction division and also the raw materials that they can supply as the inevitable upturn comes.

A question still remaining is how much negative impact the purchase of the Formica Corporation last year for nearly 1 billion Kiwi dollars will have on company bottom line.

Bought for a premium, the global maker of laminates was already in trouble before it was rescued by Fletcher Building and the company has had some trouble and unforeseen(although it should have been) expense so far in restructuring plants and manufacturing processes in order to make the initial decision to buy a relevant one.

The jury is still out.

Make no mistake, Fletcher Building is one company that will be especially hit hard over the global recession. What it has going in its favour though is good management and a backlog of work to fall back on when other sectors of its business get negatively impacted and once again a good decision by management to diversify the company geographically as well as sectorially have put the company in good stead.

As it was one of the first sectors of the economy-along with the retail sector- to show signs of this current economic slowdown, its eventual emergence from the gloom will be a good indicator that New Zealand is at the beginning of another economic upturn.

**Disclosure: I own FBU Shares


Related Share Investor reading

Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Building raises profit through canny management
Fletchers got game

Related Links

Fletcher Building Investor Info
Fletcher Building Financials

Click here for full Media Release
FBU 2008 Annual Results



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c Share Investor 2008

Conflicted Interests

Further to my piece about John Key's share disclosures this week and his former holdings in Tranzrail apparently making his position as an MP a conflict of interest, there comes info on a more pressing and real conflict of interest 

Jeanette Fitzsimons and her conflicts over shareholdings in several companies associated with her Party the Greens and the Labour Party passing "green" based legislation.   

From The Hive comes this gem:

Remember the $1 billion in funding, in part to subsidise home insulation, negotiated by the Green Party as part of the agreement to vote for the ETS?

Guess who owns shares in the company that makes this product????

This really stinks. Of course it would be too much to hope for One News to pick this up.

A comment on the Hive's post reveals the following:

Jeanette FITZSIMONS (Green, List)

1 Company directorships and controlling interests
Aeolian Property Company Limited – property management
Green Circle Farm Limited – farming
2 Interests (such as shares and bonds) in companies and business entities
Fletcher Building Limited – building materials and products
Cavalier Corporation Limited – wool scouring, carpets
Fisher & Paykel Appliances Holdings Limited – appliance manufacture

REGISTER OF PECUNIARY INTERESTS OF MEMBERS OF PARLIAMENT: SUMMARY OF ANNUAL RETURNS J. 7
23
Fisher & Paykel Healthcare Corporation Limited – healthcare equipment
Scott Technology Limited – technology
6 Real property
Family home (jointly owned), Kauaeranga Valley, Thames
One-fifth share in relative’s home near Kawhia
7 Superannuation schemes
Green Futures Superannuation Trust
MFL Property Fund

Nothing wrong with owning assets, but holding shares in Fletcher Building (DISCLOSURE: I OWN FBU shares!!) and advocating for the Emissions Trading Tax fraud law is a clear conflict of interest and as The Hive rightly states, mainstream media seem as blind as Stevie Wonder when it comes to its reportage, along the lines of the non event of John Key and his Tranzrail shares.

There is also confusion over whether she still owns Windflow Technology shares and conflicts about over holding shares in that company and Jeanette's pushing to advantage the wacky backy Windmill industry.

Go figure.

c Political Animal 2008

Why did you buy that stock? [Fletcher Building Ltd]

As the series Why did you buy that stock? comes to an end-unless I add a new company to the Share Investor Portfolio- the last company in the portfolio I will look at is blue chip darling Fletcher Building Ltd [FBU.NZ]

I have a small holding of 1000 shares which I bought for NZ$9.75 in November 2006 and it has provided me with a gross dividend income of approximately $1400 in total. FBU shares last traded at $7.20 as I write this.


Why did you buy that stock?

Why did you buy that stock? [Freightways Ltd]
Why did you buy that stock? [Kiwi Income Property Trust]
Why did you buy that stock? [Hallenstein Glasson]
Why did you buy that stock? [Briscoe Group]
Why did you buy that stock? [Fisher & Paykel Healthcare]
Why did you buy that stock? [Pumpkin Patch Ltd]
Why did you buy that stock? [Ryman Healthcare]
Why did you buy that stock? [Michael Hill International]
Why did you buy that stock? [Mainfreight]
Why did you buy that stock? [The Warehouse Group]
Why did you buy that stock? [Goodman Fielder]Why did you buy that stock? [Auckland Airport]
Why did you buy that stock? [Sky City Entertainment]



OK Darren, you are not usually too concerned about these temporary market driven figures so whats up?

Well I'm trying to make a point actually.

The fact that I have "lost" $1150 approx since my purchase doesn't concern me. It is a temporary thing and it is due to a number of factors.

Most NZX stocks have been punished by weak overseas markets and fallout from the Sub prime mess and Fletchers is no exception.

Building stocks like Fletchers are also cyclical and the company is facing the bottom of a domestic building slump, in Australasia and in the United States-their products are getting harder to shift.

All these things will inevitably change for the better, and if you are a long term investor don't sell. If you are a short termer, you might as well just bugger off now because this piece ain't for you.

The main impetus for me to invest in Fletcher Building was its pedigree for good management.

The company has existed in one form or another for more than 100 years and has grown from humble beginnings, to today developing into a very large multinational building supplier and manufacturer, retailer and commercial and residential builder in its own right.

Throughout that time it has been well manged and the current CEO Jonathon ling has done a good job so far, with the notable exception of buying the over priced Formica Corporation last year-we can all make mistakes.

As I pointed out above the building sector is highly cyclical and clearly good management is very important. So far Jonathon and his team have managed to weather the current economic storm well.

The previous CEO managed to structure the company in such a way as to diversify the company's revenue streams, so as to make the cyclical ups and downs less, well ,up and down.

Ling looks set to continue this in the future.

More revenue has come from markets outside New Zealand and Australia, with an increase in sales in Asia and America.

Good forward planning has also given Fletcher Building a good backlog of commercial building work in New Zealand and this has clearly offset the downturn in the domestic housing market, in which Fletcher's is the biggest player.

To go back to the price of the share again, when I bought at $9.75, the 60c odd per share in gross dividends represented an approximate 6 % return, which was a better return than the cash rate at the time and of course buying shares in a company that will grow profit means there is going to be a higher capital value for that company eventually.

So value for money and good returns was a compelling tick of the box for me to plunk down my hard earned.

Warren Buffett rears his bald, Coke bottle glasses adorned head again in the last column in this series.

The reason is because Fletcher Building, in my not so humble opinion, has a "economic moat" in some of the sectors in which it operates, it is:

• New Zealand's sole manufacturer of gypsum plasterboard;
• a major participant in the New Zealand steel industry;
• a major producer of aggregate, cement and concrete products in Australasia;
• the world's largest manufacturer of decorative surfaces and high pressure laminates;
• a distributor of a wide range of building materials in New Zealand;
• a substantial construction contractor in New Zealand and the South Pacific Islands;
• a major builder of residential homes in New Zealand;
• a major producer of insulation products in Australasia; and
• the world’s largest producer of steel roof tiles.

An economic moat, as coined by Warren Buffett, is an advantage in business, through dominance in the market and/or strong brands that gives the business a competitive edge, that is very difficult to compete against.

Fletcher Building have that competitive edge, they have strong brands and are dominant in the manufacture and distribution of several building materials and have a large enough and efficient enough infrastructure and well managed employees to be able to construct, commercially or domestically.

These sorts of business advantages are especially important in this heavily cyclical industry and management have clearly understood this.

Fletcher Building's strong brands are well known by consumers and the construction industry alike and even Formica Corporation will end up being a positive contribution once the fat has been liposuctioned from the company hierarchy.

So brands and a big competitive advantage were big ticks for me.

I am not adding any more new companies to the Share Investor portfolio currently or adding additional shares to those companies that I already hold, but I would be buying more Fletcher Building now if I was.

It is a great long term company and is therefore is a blue chip for a very good reason.


Fletcher Building @ Share Investor

Fletcher House built on hard times
Fletcher Building down tools in the short term
A solid foundation for the future
Fletcher Building raises profit through canny management
Fletcher's got game


Related Reading

Fletcher Building History - Auckland University


 Click here for full Media Release - FBU 2008 Annual Results



c Share Investor 2008

August reporting season will give investors a true barometer of company health

The Kiwi stockmarket is down markedly off its highs last year but the real test or indicator of company health and capital value lies in real results and an indication of the future prosperity or otherwise of the company that you have invested your hard earned dollars in.

Gather 'round investors! Reporting season is the moment of truth.

The New Zealand reporting season kicks off in August and regardless of the Credit Crunch and its fallout, record high energy prices, a bursting housing bubble and high food costs for consumers, financial results and future indication of direction are still the main indicators of company health and a company's possible day to day market value.

The slowing economy and its fallout is expected to vary widely impact wise on Kiwi companies. Of our top 30 stocks reporting, 10 were indicative of their respective fields: Auckland International Airport [AIA ] Briscoe Group [BGR] Telecom [TEL] Freightways [FRE] Fletcher Building [FBU] Goodman Fielder [GFF] Contact Energy[CEN] Tourism Holdings[THL] PGG Wrightson[PGG] and The Warehouse[WHS].

Both Briscoe Group and The Warehouse have warned of lower profits over the last week

Many companies have already indicated profit warnings, Hallenstein Glassons[HLG] and Postie Plus(PPG) have come to the table, while many companies have indicated flat earnings, The Warehouse, Telecom, Contact Energy, Sky City Entertainment[SKC] Pumpkin Patch(PPL) and Freightways have all indicated pressure on margins over the past year.

The pressure has come mainly from government intervention, with some of the obvious fuel, interest and food cost increases not helping. Increased labour costs through a higher minimum wage, 1 week extra holiday and paid maternity leave have all pressured businesses and margins. The recent increases of diesel and road user taxes by government have pushed the cost envelope to bursting. Clearly those companies with very high staff numbers will be affected by this, retailers especially.

In addition to the above, more Government associated paperwork for administration staff has lead to lower productivity.

More Government pressure from reckless spending has led to higher interest rates, for consumers and lending for business, and the increases in energy costs, due to Government dictated taxes on petrol and electricity have made 2008 a bad year and are due to get considerably worse in 2009, even under a new government.

There maybe some surprises on the upside during the current reporting season.

Sky City is likely to be one of the better performers this reporting season as economic downturns don't usually affect gaming businesses as much as retailers or infrastructure companies, like Contact Energy. Sky's Cinema business is going to have an awful result though.

Mainfreight[MFT] looks like a good bet to increase profit and Restaurant Brands[RBD], the often talked about whipping boy here should show an increase from a very low comparison this time last year.

This reporting season seems like a turning point for investors to me.

They must make up their minds whether they want to hold their investments during a coming hard year or run crying for the hills with their share proceeds in their hands.

Fortune will favour those who hang on to good companies and if you are buying shares for the first time or adding to your portfolio, look for good management first before anything else, for it is good managers with a track record that will be able to ride out the inevitable tough times.

I'm ready to face the coming months, good or bad, and reporting season is definitely going to give investors a clearer indication of exactly where their companies and therefore investments are going.

There is too much panic at the moment and decisions to sell by some who already want to should be put off after they hear company announcements this coming August.

Disclosure I own WHS, PPL, PPG, FBU, FRE, SKC, HLG, GFF and AIA shares

The economy looks bad now? But wait there's more!
The Warehouse set for a turbulent 2008
New Zealand Stockmarket set for a discontent Winter and Summer

c Share Investor 2008

Good opportunities exist for buying in current stockmarket

Everyday my portfolio takes another downwards trajectory. How about yours? Economic conditions in New Zealand and globally don't look good for the short to medium term.

There are more losses to hit markets in relation to the Sub Prime fallout, that initially revealed itself almost a year ago and the losses that have been crystalized in balance sheets around the world have had the consequent affect on credit markets, economic confidence and outlook. Future sub-prime losses will clearly continue this trend.

The added pressure of spiraling oil, food prices and every other good and service has left consumers pockets closed for business and those businesses are going to suffer as we all continue to prune costs.

Share prices have been reflecting this for more than six months but now we are set for more stockmarket revaluations as the economic gloom prepares to make itself at home.

Never fear though!

If like me you have been prepared for this you would have been squirreling away money while you could in anticipation of harder times then great. Some of our listed companies have hopefully been doing the same, unlike our present administration, and this is going to put you and them in good stead for a slow down.

It looks very likely that our stockmarket will be breaching the 3000 mark sometime this year and with that comes opportunity for buying.

The biggest opportunity for good wealth creation in the long term I would think would be US dollar sensitive stocks, all of which have been hammered over the last year because of the relative weakness of the US dollar.

It looks like the tide has turned for our dollar, with mutterings from Allan Bollard of interest rate cuts later in 2008 and the Fed talking up US interest rates.

Rakon[RAK.NZ], Fisher and Paykel Healthcare Ltd [FPH.NZ], Mainfreight Ltd[MFT.NZ], Sanford Ltd[SAN.NZ], Delegats Ltd[DLG.NZ], Pumpkin Patch Ltd[PPL.NZ] and Fletcher Building Ltd[FBU.NZ] will all benefit from the falling exchange rate while many of these companies are ready benefiting from the lower NZ/AU dollar cross, joined by the likes of Sky City Entertainment Group Ltd[SKC.NZ], Telecom NZ Ltd[TEL.NZ] and Michael Hill International[MHI.NZ] which have substantial operations in the West Island, Australia.

The biggest star that will benefit from this, which I conveniently hold, is Fisher and Paykel Health.

The company has profit sensitivity of approximately NZ$2.5 million, per one percentage point change in the value of the NZ dollar and as our exchange rate is off its recent high of .82c and is currently less than .76c then there is significant upside as the dollar retreats towards its historical levels of below 60c to the US dollar.

Its sales are also increasing strongly, so its upside in the medium to long term looks very good.

Apart from the opportunities related to a falling NZ currency there are also some very good companies ripe for bargain hunters flush with cash from better days and investors would be mad not to do some spending instead of getting those brokers and financial advisors wealthier by selling stocks and getting into gold, commodities, fixed interest, cash or some other over valued asset class.

Disc I own MFT, FPH, SKC, MHI, PPL, and FBU shares in the Share Investor Portfolio


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c Share Investor 2008

Fletcher Building raises profit through canny management

Fletcher Building Ltd [FBU.NZ] had a profit announcement today that was "inline" with market expectations and given current market uncertainties, the share price was savaged by NZ 28c, down to $8.87 on big volume of over 2.3 million shares.

1d 5d 3m 6m 1y 2y 5y max

Today's FBU chart tells the story after
a positive result out today.


To be fair the proceeding 6 months have been excellent, with a 22% rise in net profit of $235 million and a revenue increase of 19% to just over $3.5 billion. Costs clearly have been contained when you look at those two figures and compare.

Jonathon Ling has done well at his first full year as CEO and the previous head, Ralph Walters, has structured the company in such a way that revenues are diverse and able to push the company forward during economic downturns.

All Fletcher's business units increased profit.

Looking forward, Fletcher Building has over a billion dollars worth of work on backlog in New Zealand and things look positive in the infrastructure arena where governments of both colours look to build more roads and other public works.

The likes of the proposed $2 billion plus tunnel through Helen Clark's electorate of Mt Albert and the Eden Park redevelopment for the 2011 world cup could only be handled by the likes of a company Fletcher's size, so the likelihood of them getting the bulk of those contracts is in their favour.

CEO Jonathon Ling has managed Fletcher
Building well during his first hear. His
challenge now is to try and replicate that
during tougher times.

On the downside though, residential house building is currently facing a slump, while the future for that sector looks bleak in the short to medium term. Fletchers are big residential builders in New Zealand and Australia and supply substantial volumes of building products to other big contractors and small builders alike.

The acquisition last year of American Formica Corp, for close to NZ $1 billion, seems to have folded into the mixture of Fletcher's businesses well but for a slower than expected restructuring of the business and associated costs and a 10% drop in new US housing starts having an affect on laminate sales.

It will be very interesting to see how Formica do if the downturn is as severe and as long as some predict.

In retrospect it wasn't a good time for Fletchers to buy when they did last year. The purchase price and timing of the market would have been such that a lower sticker price would have been the order of the day.

As we know though it is hard to pick markets.

I personally don't think todays announcement warranted the canning the share price took and one would have to say it doesn't bode well for the NZX during this profit season if a company can report a 22% lift in after tax earnings and have "Mr Market" knock more than 3% off company capitalisation.

I give this result a 9.5 out of ten. Good effort, excellent results and great management.


Disclosure: I own FBU shares


Fletcher Building @ Share Investor

Fletcher House built on hard times
Fletcher Building down tools in the short term
Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher's got game


Related Reading

Fletcher Building History - Auckland University

Fletcher Building Financials

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities
• Half Year Results Presentation.pdf ( 1.00 KB )
  

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c Share Investor 2008



The full NZX /Fletcher Building press release:


FBU
13/02/2008
HALFYR

REL: 0900 HRS Fletcher Building Limited

HALFYR: FBU: FBU Half Year Results Announcement

Name of Listed Issuer: Fletcher Building Limited

For Half Year Ended: 31 December 2007

This report has been prepared in a manner which complies with generally
accepted accounting practice and gives a true and fair view of the matters to
which the report relates and is based on unaudited accounts.
The amounts as presented have been prepared in a manner which complies with
New Zealand accounting standards which comply with International Financial
Reporting Standards (IFRS).

CONSOLIDATED OPERATING STATEMENT FOR THE HALF YEAR ENDED 31 DECEMBER 2007

Unaudited

Current Half Year NZ$'M; Up/Down %; Previous Corresponding Half Year NZ$'M

Total operating revenue: $3,547m; up 19%; $2,980m.

OPERATING SURPLUS BEFORE UNUSUAL ITEMS AND TAX: $327m; up 11%; $295m.

Unusual items for separate disclosure: 0; n/a; 0

OPERATING SURPLUS BEFORE TAX: $327m; up 11%; $295m.

Less tax on operating profit: $83; down 10%; $92m.

OPERATING SURPLUS AFTER TAX BUT BEFORE MINORITY INTERESTS: $244m; up 20%;
$203m.

Less minority interests: $9m; down 10%; $10m.

OPERATING SURPLUS AFTER TAX ATTRIBUTABLE TO MEMBERS OF LISTED ISSUER: $235m;
up 22%; $193m.

Extraordinary items after tax attributable to Members of the Listed Issuer:
0: n/a: 0.

OPERATING SURPLUS (DEFICIT) AND EXTRAORDINARY ITEMS AFTER TAX ATTRIBUTABLE TO
MEMBERS OF THE LISTED ISSUER: $235m; up 22%; $193m.

Earnings per share: 47.0 cps; up 14%: 41.1 cps

Interim Dividend: 24 cps

Record date: 21 March 2008

Date Payable: 10 April 2008

Tax credits on latest dividend: 100% for New Zealand comprising imputation
credits.

Non New Zealand tax payers can benefit from the partial refund of the New
Zealand tax credits as outlined in the attached press release.

SUMMARY

Directors today announced the group's unaudited interim results for the six
months ended 31 December 2007. Net earnings were $235 million, compared to
$193 million in the previous corresponding period. This is an increase in
earnings per share from 41 cents to 47 cents.

Operating earnings (earnings before interest and tax) and after Formica
restructuring costs of $16 million were $394 million, compared to $340
million in the previous corresponding period. The increased earnings are due
to the Formica acquisition, ongoing operational improvements and some small
acquisitions.

The interim dividend of 24 cents per share is an increase of 2 cents per
share over the previous interim dividend and is the twelfth consecutive
dividend increase by the company. Total shareholder return was negative 4
percent for the half-year, influenced heavily by the uncertainty in equity
markets internationally.

The 22 percent increase in net earnings reflects strong operating
performance, with all divisions recording higher earnings than in the
previous corresponding period. Laminates & Panels' earnings increased on a
like-for-like basis, and also benefited from the acquisition of Formica
Corporation on 2 July 2007.

The Chief Executive Officer, Mr Jonathan Ling, said: "This is a pleasing
performance which reflects the group's ability to deal with variable and
sometimes difficult operating conditions. Across our businesses, commercial
and infrastructure markets are still strong, which is best exemplified in New
Zealand with a construction backlog of over $1 billion. While there is some
weakness in residential markets and provided there is no significant change
in economic conditions, we remain comfortable with our earnings prospects for
this financial year".

Key Points

- Group net earnings up 22 percent to $235 million
- Operating earnings up 16 percent to $394 million
- Cashflow from operations up from $227 million to $245 million
- Earnings per share up from 41 cents to 47 cents
- Interim dividend of 24 cents per share with full New Zealand tax credits -
the 12th consecutive dividend increase
- Acquisition opportunities being evaluated

Contact:
Jonathan Ling Bill Roest
Chief Executive Officer Chief Financial Officer
Phone: +64 9 525 9169 Phone: +64 9 525 9165
Fax: +61 9 525 9032 Fax: +64 9 525 9032

Fletcher's got game

Artist impression of the new Eden Park

In a provisional decision, it has been announced today that Fletcher Building Ltd [FBU.NZ] has been picked as the preferred builder for the new Eden Park revamp, valued at anywhere between NZ$190 million and north of $300 million, depending on who you speak to.

The stadium is to be rebuilt for the 2011 Rugby World Cup and construction is expected to start in August 2008.

If Fletcher's can negotiate a good deal for them, it is going to be good for the company. I'm mindful though that many stadiums built around the world have caused construction companies much grief, as changes to design, construction problems, and political meddling has put profits at stake and even put company futures at risk.

The new Wembly Stadium almost sunk the Australian builder Multiplex last year and the company building the new Vector Arena in Downtown Auckland lost big dollars on that project.

It is more than likely that the big New Zealand construction company will win the bid as it has the size and experience to be able to complete the project

Grab your seat for the game, Fletchers could be in for a bumpy ride.


Fletcher Building @ Share Investor

Fletcher House built on hard times
Fletcher Building down tools in the short term
Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Building raises profit through canny management


Related Reading

Fletcher Building History - Auckland University

Fletcher Building Financials

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities
• Half Year Results Presentation.pdf ( 1.00 KB )
  

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c Share Investor 2007

Share Investor Friday free for all: Edition 12

Fat Prophets

There have been some good company results out this week. Ryman Healthcare had a 20% rise in profit for the last half year and forecast another strong year in 2008, while Fisher and Paykel Health half year profit was down sharply because of repatriated funds in US dollars lower due to the weak US currency but sales and profitability before currency exchange were up strongly.


Part of a Ryman Healthcare Village

Earlier this week, Mainfreight half year profit rose around 9% before abnormals and future guidance gave investors positive encouragement for their investment in the company.

OK, OK, so I'm blowing my own trumpet because I own shares in all these companies? Well, Yes and No.

While individually these 3 companies are doing well, with rising sales, profits and good future profits indicated, as a group they show that New Zealand listed companies are still doing well, despite all the international drama of market turmoil, rising oil, mineral, commodity prices and Al Gore putting his carbon footprint in his mouth again.

Investing long term in good companies always beats the likes of trading carbon fairy dust!


I'll be baackk

The Loan Terminator, Governor Arnold Schwarzenegger, is back in the news again this week, in a sequel to his Terminator movies that would have him eliminate Californian home loan debtors the pain of repaying their sub prime mortgages at normal interest rates by making the sweetheart deals they initially signed up for extend for a period of up to seven years.


The Governator terminates debt while
looking cool at the same time.

The bulk of these "sweetheart" deals at very low interest rates were due to be recalculated in several months time but 3 lending institutions who have exposure to 25% of sub prime loans, Countrywide Financial Corp, GMAC, Litton Loan Servicing and HomEq Servicing, seem to have convinced Arnie that eliminating the inevitable collapse of borrowers next year and putting it off till 2014 is a great idea.

As I have ranted on before, these individuals, as sad as it is, simply need to bite the bullet and face the music now, instead of slowly dragging down the rest of us with them.

Arnie needs to go back to Hollywood and fight the bad guys not Terminate borrowers' and lenders' responsibilities to face their own debt woes.

Terminator 4 anyone?


The carbon fairy has no clothes on

In what is clearly gearing up to be one of history's greatest financial explosions and implosion when it all inevitably collapses, is news today that the carbon trading "market" tripled in size to US$30 Billion last year.

With this market built on failed "science", lies and spruiking by the likes of wealthy green investors Al Gore and Leonardo Di Caprio, like all markets built on such flimsy backgrounds the money made, and there will be billions, will be made by those that get on the greenwagon first:

Since co-founding Climate Change Capital in 2003, James Cameron and his business partner Mark Woodall have turned their company into a powerhouse in the burgeoning global market in greenhouse gases. Driven by the Kyoto Protocol on global warming, an accord Cameron helped write, this corner of the derivatives arena is growing as never before.


Clearly, Cameron and Woodall are smart cookies but these self interested scam artists, who have written their own rules and now profit from them by "investing" other peoples hard earned cash into worthless carbon credits will be the first to withdraw their own funds when the climate change hysteria is revealed for what it is, that the sun simply getting hotter.


A Carbon footprint recently traded on Ebay for
US$1 Million.

I am old enough to remember similar things happening during the dot com era where mum and dad investors piled into worthless "businesses" and the big boys got out first before the truth about the bulk of silicon valley Internet companies hit the investment fan.

The same thing is going to happen with the carbon trading market.


Fletcher Building's got game



Artist impression of the new Eden Park

In a provisional decision, it has been announced today that Fletcher Building has been picked as the preferred builder for the new Eden Park revamp, valued at anywhere between NZ$190 million and north of $300 million, depending on who you speak to.

The stadium is to be rebuilt for the 2011 Rugby World Cup and construction is expected to start in August 2008.

If Fletcher's can negotiate a good deal for them, it is going to be good for the company. I'm mindful though that many stadiums built around the world have caused construction companies much grief, as changes to design, construction problems, and political meddling has put profits at stake and even put company futures at risk.

The new Wembly Stadium almost sunk the Australian builder Multiplex last year and the company building the new Vector Arena in Downtown Auckland lost big dollars on that project.

Grab your seat for the game, Fletchers could be in for a bumpy ride.


NZX Market Wrap



The benchmark NZSX-50 index, which yesterday ended below where it started the year, close up 16.8 points on 4071.0.

Turnover was light at $71 million.

"The over-riding theme was one of extreme caution," said ABN Amro broker Matt Willis. While value was starting to emerge, there was no rush to buy. Investors remained risk averse due to the US subprime mortgage crisis, which he said was a bi-product of weakening economy.

On the local scene, results of export stocks this week revealed the lagged impact of the high dollar was starting to hurt as currency hedges ran out. Companies were concerned about higher costs.

"Operating conditions are less than positive and that has followed through into sentiment."

However, retirement village operator Ryman Healthcare picked up 2c to 207 after reporting a 22 per cent lift in half year net profit after tax to $34.7 million.

The main factor in the market's rise today was a 7c rise in top stock Telecom, to 427. Rival Telstra rose 6c to 536.

No.2 stock Fletcher Building pared its morning loss to 5c, ending on 1175, after it was confirmed as the prime contractor to revamp Eden Park.

No.3 Contact Energy finished 4c up on 889.

NZ Oil & Gas eased back 2c to 110, having traded up to 113 in the morning, after gaining 11c yesterday on news estimated oil reserves for the Tui field had increased 30 per cent to 41.7 million barrels. That was worth an extra $200 million to NZOG, over time.

Sky City ended unchanged on 518 with possible bidders expected to show their hands early next week. However, share action suggests the market does not hold high hope for high offers.

Australian stocks mostly had a good session despite uncertainty surrounding tomorrow's election result.

Lion Nathan, which on Wednesday reported a strong result with good prospects for 2008, closed up 60 at 1100.

Goodman Fielder recovered some of its recent losses with a 9c gain to 230.

NZPA

NZ Dollar Wrap

Reuters currency rates

5pm today 5pm yesterday

NZ dlr/US dlr US75.62c US75.46c
NZ dlr/Aust dlr A86.25c A86.41c
NZ dlr/euro 0.5060 0.5074
NZ dlr/yen 81.60 82.10
NZ dlr/stg 36.47p 36.53p
NZ TWI 69.31 69.42
Australian dollar US87.64c US87.36c
Euro/US dollar 1.4942 1.4870
US dollar/yen 107.89 108.84

Disclosure: I own Fletcher Building, Ryman Healthcare, Fisher Healthcare and Mainfreight shares

C Share Investor 2007

Market Musings on the NZX

Market watchers in North America and Europe may well be asleep as I write this. If you were down in this part of the world you would be watching your portfolio drop once again after NZX investors took their lead from you who are asleep at present. The NZX is down 60 points as I write with the ASX down 165.



My portfolio is down almost 20% from this years highs and the bulk of that drop has been in the last two weeks.

Fear has gripped our market and our dollar cross with the US dollar has fallen from an all time high of over 81c to less than 70c as I write because foreign investors are moving their Kiwi investments offshore for "safer" risks.

I am not selling and will not sell but my main problem at the moment is when to buy more of what I already hold. There are 4 stocks out of the 11 that I hold that have fallen below their original purchase price but they seem to becoming cheaper and cheap by the day. I wait with my finger poised on the buy button on my computer screen.

One stock I am looking at more closely, now that the Summerset Retirement float has been cancelled today, is my holding in Ryman Healthcare (RYM) the Retirement home operator. It is looking tasty but could go lower.

Opportunities also abound in NZs Blue chips. Telecom New Zealand(TEL) is due a 14c dividend soon and is trading well down. Fletcher Building (FBU) has been given a right troweling as of late, with a 23c dividend due and Sky City Casino (SKC) has its chips down a few days before their full year announcement on Monday 21 August.

Auckland International Airport (AIA) has news that just over 6% of its shares have been purchased by Infratil (IFT) in conjunction with a Government Retirement fund, a potential blocker of a merger between AIA and Dubai International Aerospace. Strangely AIA shares are up today.

Steel and Tube (STU) the steel maker and supplier, have announced a 10% profit decrease today on increased business costs and increased revenue. A 14c dividend waits in the wings for STU shareholders.

Fisher and Paykel Appliances(FPA) has announced that they are moving their electronics division to Thailand. It will share a factory roof with the washer division that announced plans to move there earlier this year. 96 jobs will go from South Auckland with a saving to FPA of 6 million dollars.

Meanwhile the Labour Government is in trouble with its voters because the partially State owned and listed airline , Air New Zealand (AIR) has been carrying Australian troops to get them to theatres of war in the Middle East, something that cuts against the beliefs of Labour ministers and a minority of over vocal New Zealanders. The share price landed sharply.

On a much lighter and perhaps tasty note, for the third day in a row Burger Fuel(BFW) has failed to trade.



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  c Share Investor 2007