Australian building materials company Adbri hit by $300m wipeout

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One of Australia’s largest cement and building materials makers suffered a 16.6% drop in its share price, wiping nearly $300 million off its market value.

A combination of factors led to Adbri’s precipitous downfall, including operational challenges posed by wet weather, declining lime volumes, and high electricity, fuel, shipping and transportation costs.

On Monday, Adbri’s stock price hit a low of $2.14, before rebounding slightly and closing at $2.21. This is a decline of 16.6%, after Adbri closed the week at $2.65. Year-over-year, its share price was down 40.75%, Yahoo Finance reported.

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In response, Adbri Managing Director and CEO Nick Miller said it was now up to the company to “control the controllable elements” and resist current market factors. He said the company would also implement its third off-cycle price increases for 2022 starting in September, in a bid to bolster the company’s profit margins.

“There is a lag in our industry in terms of price increases,” Miller said, via the Financial analysis. “Companies in our industry are facing unprecedented external shocks at a level we haven’t seen in many years.

“There is a lag in our industry in terms of price increases.”

According to the company’s first-half 2022 earnings release, Adbri increased revenue 8% to $812.4 million, compared to first-half 2021 results.

This was driven by “strong demand in the construction and mining sectors and improving prices for most products”, they said.

However, its after-tax net profit fell 1.3% to $54.3 million.

The report reiterated that this was due to “operational challenges associated with extreme wet weather events on Australia’s east coast, projected lower lime volumes, increased raw materials, shipping, transport, electricity and fuel costs”.

The fall in Adbri’s share price follows the ASX’s biggest decline in six weeks, with commodities stocks the hardest hit. The ASX 200 closed down 1%, or 68 points, at 7047 at the end of trading Monday.

News.com.au has contacted Adbri for comment.

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