Fletcher Building's shares have plunged by 12% after the company issued a profit warning for the first half of the year, due to weak housing and commercial construction activity.
The country's largest listed company is forecasting its profit to be 10% lower than the $166 million it made in the six months to December 2010.
Its general manager of investor relations, Philip King, says the gradual improvement in the housing market it had expected back in June has not eventuated.
He says results are down in Fletcher's New Zealand businesses which are exposed to the residential construction sector, and in Australia there are low levels of new housing consents coupled with subdued conditions in the commercial building market.
Mr King says the company expects its full-year result will be similar to last year's underlying profit of $359 million, but only because of a contribution from its recent acquisition, Cranes.
Much higher profit expected
Morningstar Research's senior equities analyst, Nachi Moghe, says the forecast shocked the market because analysts had expected a much higher annual profit.
He says the profit estimates of analysts were in the region of $440 million to $450 million, so the band that was given by management of $359 million was a big downgrade.
The company's shares plunged 98c to $6.92 on Wednesday.