Since October 11, Fletcher shares have plummeted 22% in value from $7.90 to $6.15, wiping $1.19 billion off its market capitalisation. Trading at more than two-year lows, its shares were at $9.28 in mid-April this year. They clawed back to $6.18 on Thursday then settled around $6.10 on Friday.
At Fletcher's annual meeting in Auckland last Wednesday, executives reiterated to shareholders lacklustre news on the trading prospects for the year ahead, which had been delivered last month and prompted Fletcher to issue a 10% earnings downgrade to first-half trading in mid-October.
Craigs Investment Partners broker Chris Timms said the company was continuing with its conservative line which was "better to under-promise and later over-deliver", which investors had come to expect to hear.
However, while Fletcher had already signalled a 10% decline in first half 2012 earnings in recent weeks, Mr Timms said Craigs was less optimistic than Fletchers on its full-year outlook and last week factored in a 15% after tax profit for the first half and 5% in the second half, compared to the same period a year ago.
"We believe the Australian business is likely to be impacted by Crane [$1.3 billion acquisition] and also in its Laminates and Panels division ... and we have reduced the earnings before interest and tax on the Infrastructure division," he said.
Fletcher's chairman Ralph Waters said the company saw no material improvement in trading in any market, other than Asia, in the first half of 2012, with a risk of a further downgrade if construction volumes fall, The New Zealand Herald reported.
He reiterated the company's forecast last month for a 10% decline in first-half profit to $166 million, and no growth in full-year earnings, before one-time items, from last year's $359 million.
Mr Timms said: "It's prudent to be more cautious at this stage and therefore we have reduced earnings to be further below [Fletcher's] guidance".
Share price volatility in recent weeks has been partly accredited to there being a later start to the rebuilding of Christchurch's, plus issues such as insurance claims and reinsurance problems, low building consent numbers, further earthquakes and Treasury also pushing out its rebuilding cost expectations.
