Fletcher Building (ASX: FBU) announced 2013 earnings today, and shares are soaring on a profit-packed report. At first glance, the construction company's 4% drop in sales to $8.5 billion seems to be a doomsday sign, but the dip is the result of strategic divestments made throughout the year.
In contrast to its top line numbers, EBITDA clocked in 25% higher at $789 million, while cashflow from operations made a similar 25% leap to $559 million. "In New Zealand, our operating earnings before significant items increased by 38 per cent and this was driven by rising levels of new house building activity and strong momentum with the repairs and rebuilding work in Canterbury," said CEO Mark Adamson in a statement today. "Importantly we have been able to mitigate the impacts of the high New Zealand dollar and increased competition through our cost-out and efficiency initiatives."
While sales soared in Kiwi land, Oz proved less optimistic. Adamson point to weak residential and commercial markets, as well as a tough year for mining and other natural resources investments. Europe sales took a dip as Asian investments returned mixed results.
The company has been undergoing a massive reorg to cut costs and streamline operations, and expects to save around $75 million to $100 million per year starting in 2015. Looking ahead, Fletcher expects New Zealand earnings to keep increasing, while Australia growth should stay steady. The company will elaborate more on its 2014 outlook at its annual shareholders meeting in October.
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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.
