Adelaide Brighton shares sink on big profit downgrade, weak property markets

Adelaide Brighton Ltd (ASX: ABC) shares lose 17% on a 25% profit downgrade.

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The Adelaide Brighton Ltd (ASX: ABC) share price is down 17% to $3.56 in early trade after the building materials business told investors it now expects net 'underlying' profit between $120 million to $130 million for its financial year ending December 31, 2019. 

"The primary drivers for the decline in expected earnings include further softening of demand for construction materials in the residential market, increased competition from cement imports, increased competitive pressures in Queensland and higher costs of key raw materials compared to the prior year," commented the group.

It was only back on May 9 2019 that Adelaide Brighton warned investors that current financial year profit would be down around 10%-15% on the $190 million achieved in FY 2018 for similar reasons to those provided again today. 

As such today's guidance represents a downgrade of around 25% when taking the mid-points of the prior guidance ($167m) and new guidance ($125m) as approximate ranges.

We can see why investors sent the shares to the dog house this morning. 

Elsewhere building materials peer Boral Ltd (ASX: BLD) has lost 8% this morning as investors get skittish on the back of Adelaide Brighton's news. 

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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