The Fletcher Building Limited (Australia) (ASX: FBU) share price is on the floor today after the New Zealand-focused construction giant announced a big downgrade to its earnings guidance for the year ending June 30 2017.
The firm now expects full year earnings before interest, tax and significant items (EBIT) to come in between NZ$610 million to NZ$650 million for the full year compared to prior guidance for EBIT between NZ$720 million to NZ$760 million.
The big shock is the size of the downgrade (around $100 million) and how quickly the company has downgraded guidance that was given just on February 22.
It blamed the outcome on the "identification of estimated losses and downside risk in the Buildings and Interiors (B+I) business unit of the Construction division." More specifically management flagged that a complex single "major project" will now produce a bigger-than-expected loss as the result of ongoing operational reviews.
No surprise that the shares are down 10% to $7.50 this morning as investors mark the stock down, although it has still climbed around 10% over the past year thanks to a robust Kiwi economy supported in part by falling base lending rates.
Other businesses in the construction and building materials industry closely followed by property hawks include Mirvac Group (ASX: MGR), Boral Ltd (ASX: BLD), Brickworks Limited (ASX: BKW) and U.S. focused James Hardie Industries plc (ASX: JHX).
Some say you can't go wrong with bricks and mortar, but you can't go wrong with growing dividend income either…
