Fletcher Building is scaling back production at a glasswool insulation plant in Melbourne, due the Australian government winding down its fiscal stimulus package.
The federal government intended to spend nearly $A4 billion insulating 2.7 million houses by 2011, but this has since been reduced to just over one million houses.
Fletcher Building suspended operations at an insulation factory in Sydney last month. In total, 120 jobs have now been lost.
Its Australian insulation business is now expected to make only half of what it did last year, but Fletcher Building says this will not affect its full year forecast, which is between $278 - $303 million.
Shares in Fletcher Building fell 9 cents, or 1%, to $8.43 on Thursday.