Fletcher Building will benefit from NZ earthquake

Rebuilding after the Christchurch earthquake will push up demand for products from New Zealand's largest construction group Fletcher. While acknowledging the tragedy of the earthquake, investors say it's clear NZ's construction sector, which had been expected to be quite subdued, will see a lift from the added government spending following the earthquake.

Early figures from NZ Treasury estimate the reconstruction costs to damaged assets could be $NZ4 billion ($3.14bn) and as one of only two major suppliers of cement in the market, Investors Mutual senior portfolio manager Simon Conn said he expected Fletcher Building's products to be in high demand.

"The Christchurch rebuild will lift demand for a whole list of their products, so Fletcher is well placed on the back of that," he said. Analysts at Credit Suisse estimate the increased construction activity, coupled with a recovery to mid-cycle building levels in Australia and NZ, could lift Fletcher's earnings before interest and tax (EBIT) by about 40 per cent to $NZ748 million by the end of 2012.

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