Shares in cement maker Adelaide Brighton Ltd slid more than 9% on Friday to a 29-month low after it became yet another industrial company to downgrade earnings for 2018 or 2019.
The shares down 49 cents or 9.5% at $4.65, the lowest they have been since mid-2016.
The company, which balances its 2018 year on December 31, told the ASX that it now expects underlying net profit after tax, excluding property, for the year-end to come in at between $188 and $195 million, compared to $190.3 million for the prior year.
“This update is slightly below guidance provided at the time of the half-year results on 22 August for the 2018 full year underlying net profit after tax, excluding property, then anticipated to be in the range of $200 to $210 million,” the company said in its statement.
“The updated guidance is based on unaudited internal management accounts and expected performance for the remainder of the calendar year.”
Adelaide Brighton joins other building products groups in Fletcher, CSR, and Boral in warning of weaker profits or no growth.
The downturn in home building and apartment industry is the culprit and has seen Boral shares fall 35% so far this year, CSR shares drop 37% and Fletcher shares, down nearly 38%. Adelaide Brighton shares are now down 28% for 2018 so far.
CEO Martin Brydon (who retires shortly) said in the statement, “While the performance of the business has generally been pleasing, a number of factors have led to demand in the second half being slightly lower than anticipated. The ramp up in a major South Australian infrastructure project has been slower than expected in the current year, however, overall project volumes are on forecast.
“A slower than expected start to the historically busier second half of the year in the construction market in Western Australia and recovery from the earlier adverse weather conditions in the east coast markets has not been as strong as expected.
“It’s pleasing that demand has supported price improvement across our product range, plus further costs savings from the Company’s operational improvement program, have supported earnings for the period.”
The company will report its 2018 results on February 28 next year.