Fletcher’s sales struggle on weak US, Europe markets

Fletcher’s sales struggle on weak US, Europe markets
Published: 13 October 2009

New Zealand-based Fletcher Building Ltd., the world’s largest maker of laminated building board, said a slump in U.S. and European construction of offices and shops may delay a recovery in sales at its Formica unit.

The division’s sales in North America are below those in the year ended June 30, the Auckland-based company said in a presentation filed with the New Zealand stock exchange today. U.S. and European commercial building markets remain weak even amid signs of a “mild” rebound in housing, Fletcher said.

“Economic data suggest that conditions are tougher than expected,” Formica Chief Executive Officer Mark Adamson said in the presentation. “The macro economic indicators affecting housing are improving, but more is needed for the housing market to turn the corner.”

The laminates and panels division, comprising Formica and Laminex Group, is Fletcher’s biggest by sales and assets. The company, which gets about half its revenue outside New Zealand, is cutting jobs and restricting investment to protect earnings as the global slump reduces demand for its bench tops, wallboard, concrete and roofing steel.

Fletcher reported a NZ$46 million ($34 million) full-year loss in August after NZ$500 million of writedowns and costs to shut plants and fire 2,500 workers worldwide. The company didn’t forecast earnings then and said only that volumes would be down in the six months through Dec. 31.