Fletcher Building Limited (Australia) shares sink on second profit downgrade
Shares of Fletcher Building Limited (ASX: FBU) have fallen 5.7%, after the company downgraded its operating earnings. FBU expects operating earnings before interest, tax and significant items (EBIT) to be approximately $525 million for the year ended 30 June 2017 against the previous guidance of $610-$650 million. Trading in the Building Products, International, Distribution and Residential and Land Development divisions, as well as three of the four business units in the Construction division (Infrastructure, Higgins and South Pacific) are in line with the Company’s expectations. However, as work on major projects in the Building + Interiors (‘B+I’) business unit has progressed, losses in B+I is expected to exceed the previously estimations. The increasing losses are due to higher write-downs at one of the major projects, extension of completion date at another project, and reduced profit expectations on several smaller projects in the remainder of the B+I portfolio. Further, an impairment charge of approximately $220 million on Iplex Australia and Tradelink will be reported when the company finalizes its annual financial statements. It represents approximately 3% of the group’s total assets, and will be reported below the EBIT line. The Board has appointed Francisco Irazusta interim CEO effective Monday 24 July 2017.
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