Infrastructure

Infrastructure’s operating earnings for the first six months were $75 million compared with $103 million in the prior corresponding period.

The recession has had a substantial impact on activity levels for the construction materials, property and residential operations whilst the construction business maintained similar levels of activity.

Operating earnings of the concrete businesses in New Zealand were $21 million below the previous corresponding period. Demand continued to soften during the period for all construction materials due to weaker market conditions. Cement, aggregates, readymix concrete, concrete pipe and precast products volumes were 11 percent, 27 percent, 15 percent, and 27 percent respectively below those recorded for the previous corresponding period. While cement prices were stable, downward pricing pressure was experienced for other products in many markets. An ongoing focus on reducing costs and business improvement initiatives helped mitigate the impact of lower volumes.

The Australian concrete pipe operations experienced softer market conditions with product volumes 16 percent below the same period last year. A favourable sales mix, cost reductions and other business improvements limited the earnings decline to $4 million. In the quarry business, volumes and earnings were in line with the previous corresponding period.

Construction earnings were consistent with the prior period. The construction backlog was $1.1 billion at the end of December. Major contracts won in the period include Victoria Park tunnel ($240 million), Ormiston Road School ($40 million) and the Hutt hospital ($50 million). The level of public funded work remains very high at over 80 percent of the total backlog. With commercial construction work expected to remain slow in the short term, activity will continue to be dependent on government spending.

Property sales earned $7 million compared with $10 million last year. This included earnings in the residential business, which were $1 million higher due to an improved sales mix and the sale of surplus land holdings.

Golden Bay Cement: Completed in December, the new Service Centre Plant in Auckland.
Andrew Moss, General Manager, Golden Bay Cement.

Eden Park: The redevelopment at Eden Park received a royal approval when HRH Prince William visited the Fletcher Construction team in January.
L to R: Auckland City Mayor John Banks, “Populous” Architect Daryl Maguire, a member of the Diplomatic Protection Squad, HRH Prince William, Project Director Fletcher Construction Alan Gray, Eden Park Trust Board Chairman John Waller.