(Reuters) - Australian building materials maker Boral Ltd (BLD.AX) warned on Wednesday of a weaker first half in fiscal 2020 due to project delays and a softer housing market, although it also said there were signs of improvement.
Boral shares dropped 4.3% for their biggest intraday fall in more than two months, while the broader market was roughly flat.
The Australian housing market is emerging from a two-year downturn that chipped away at household wealth and undermined consumption and business earnings.
Home prices rose for a fourth straight month in October amid record-low interest rates and looser lending standards.
Even so, Boral said the market was still soft and, coupled with infrastructure project delays, its first-quarter earnings were lower.
The Sydney-based company expected earnings before interest, tax, depreciation and amortisation (EBITDA) in the first half of fiscal 2020 to be about 5% lower than last year.
Project delays will also likely hit first-half earnings to the tune of A$10 million ($6.9 million) as disruptions and equipment failures at two of its plants impeded production.
Lower interest rates also have supported the U.S. housing market, but Boral said the improvements had yet to filter through in the first quarter and its U.S. earnings were lower.
“Early signs of the U.S. housing market improving are yet to flow through but should benefit results in the second half of the year,” it said in a statement prepared for its annual general meeting.
Boral reaffirmed its previous forecast for net profit after tax to be 5% to 15% lower in fiscal 2020.
Michael McCarthy, chief strategist at CMC Markets and Stockbroking, said it was disappointing that improving housing markets in Australia and the United States were not likely to boost first-half earnings.
“All round, this is not a scorecard that Boral shareholders want to see,” he said.
Reporting by Shriya Ramakrishnan and Nikhil Kurian Nainan in Bengaluru; Editing by Jane Wardell and Stephen Coates