A sharp decline in housing construction has prompted building products maker Boral to cut full year profit expectations for the second time in three months.
Boral chief executive Ross Batstone says the slump in new housing starts, coupled with bad weather that delayed major projects and an earlier-than-planned maintenance shutdown of a cement factory in June, prompted the profit downgrade.
These recent developments overshadowed what Mr Batstone said was a very strong performance during May.
"We've seen, regrettably, that significant decline during the month of June," Mr Batstone told reporters during a conference call on Wednesday.
Boral said on Wednesday net profit after tax and before significant items for the 12 months to June 30, 2012, was expected to come in between $100 million and $110 million.
This was down from estimates of a $128-153 million result provided in April and guidance given in February for net profit before significant items of $150-175 million.
The market, which had been expecting a result in a range between $115 million and $139 million, sent Boral shares tumbling in response.
At 1534 AEST, Boral was down 2.19 per cent, or seven cents, at $3.12 on a day the broader market gained half a per cent.
Mr Batstone noted figures from the Australian Bureau of Statistics (ABC) which showed the number of housing starts had fallen 24.5 per cent in the three months to March 2012, compared with the prior corresponding period.
"That's the second year of decline," Mr Batstone said.
"I have been in this business now for over 20 years and I must say the levels we are currently I have rarely seen over that period and in fact over the last 30 years."
Mr Batstone, who became chief executive in May after Mark Selway's departure, said Boral's USA and Asian operations had performed broadly in line with company expectations.
The earnings guidance was dependent on two Boral-owned properties being sold before the end of the 2011/12 financial year, he said.
Also, Mr Batstone said Boral was comfortably within its banking covenants and did not expect any need for a capital raising in the short to medium term.
The company was also working through the sale several non-core businesses.