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NZ's Fletcher Building trims annual profit guidance after Formica sale

[BENGALURU] Fletcher Building Ltd on Tuesday lowered its operating profit forecast for fiscal year 2019 after completion of the sale of its Formica business, sending shares in New Zealand's largest builder sharply lower.

The company now expects earnings before interest and tax before significant items for fiscal 2019 to be between NZ$620 million and NZ$650 million (S$559.62 million-S$586.71 million), compared to its earlier guidance of NZ$650 million to NZ$700 million.

The Auckland-based firm attributed the cut in guidance to the exclusion of the June earnings from Formica - a large trading month for the business - as well as softer performance in Formica Europe and North America, which put pressure on its international division.

Fletcher had announced an agreement to sell the Formica Group to Netherlands-based Broadview Holding BV for US$840 million in December, as it looked to streamline and exit non-core businesses.

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Formica is engaged in the design, manufacture and distribution of surfacing products for commercial and residential applications.

"Our strategy is to refocus Fletcher Building's capital and capability behind our New Zealand and Australian businesses, with building products and distribution at our core," Fletcher Building CEO Ross Taylor said.

Shares of Fletcher were trading 4.6 per cent lower, its largest intraday drop in three and a half months, compared with a 1.2 per cent fall in the benchmark New Zealand index.