Boral Ltd. shares slid to the lowest price in almost four months after the building-products maker said third-quarter profit in its construction materials division missed forecasts due to Australian housing-market weakness.
Boral shares were down 3.2 percent to A$4.52 at the close of trading in Sydney, the lowest closing price since Jan. 15. Earnings in Boral’s construction materials and cement unit in the three months ended March 31 were A$19 million ($19.6 million) below forecast, the Sydney-based company said in a regulatory filing.
“Continued weakness in the Victorian market especially suggests that housing demand in Australia is directionally challenged and I don’t think it’s improving at all,” Mike Kane, chief executive officer of Boral, told reporters in a teleconference today. “Too much product chasing too little demand makes a difficult pricing environment to get any price appreciation.”
The construction materials and cement division’s third-quarter earnings were hit by declining home building in Victoria state, project delays in both Victoria and South Australia and poor weather in southeast Queensland, the company said in the statement.
House prices in Melbourne, the capital of Victoria, have fallen 5.7 percent since peaking in the third quarter of 2010, and 9.3 percent in the Queensland capital of Brisbane since peaking in the three months ended June 30, 2010, figures from Brisbane-based researcher RP Data showed.
Net income before items will be between A$90 million and A$105 million for the year ending June 30, compared with A$101.2 million a year earlier, Boral said today. Increased revenue from liquefied natural gas projects in Queensland and Western Australia and cost cuts will drive the increase, it said.
The company expects to generate as much as A$300 million from asset and land sales by June 30, 2014, it said.
Boral shares have risen 3.4 percent this year, compared with a 10.9 percent gain in the benchmark S&P/ASX 200 Index.