The slump in the construction and automotive markets is hitting Gibraltar Industries harder than company officials expected.
Gibraltar executives, who warned in October that the slumping housing and automotive markets would cut into the company's fourth-quarter earnings, said the impact was even more severe than they expected.
Gibraltar now expects its profits during the quarter that ended last month to be between 25 cents per share and 27 cents per share, before special charges, down from the 33 cents per share that analysts surveyed by Thomson Financial/First Call were expecting.
"The sale of our products into the retail housing market declined more than we expected," said Brian J. Lipke, Gibraltar's chairman and chief executive officer.
Lipke said Gibraltar's building products sales, which account for more than half of the company's revenues, will be down by about 6 percent during the quarter, roughly double the decline that executives expected in October.
Gibraltar's automotive business is down about 6 percent from a year ago, although that is in line with what company officials had expected in the fall.
Gibraltar also said it will write off the value of its 50 percent ownership stake in its Duferco Farrell joint venture, which was formed in late 2003 to operate a strip steel plant in Farrell, Pa. The plant has essentially shut down after being battered by the consolidation in the steel industry and rising steel prices, said Kenneth Houseknecht, a company spokesman. "The economics of that operation, which made sense when we formed it, don't apply anymore," Houseknecht said Tuesday.
The write down will cut Gibraltar's earnings during the fourth quarter by $11 million to $13 million, but that charge was not included in the company's reduced earnings forecast. Gibraltar previously wrote down the value of the joint venture by $1.8 million last year. While Gibraltar did not make any forecasts for 2007, Henning N. Kornbrekke, the company's president and chief operating officer, said he expects it to be "another solid year" that will start off slower than usual and pick up strength as the year progresses.
Gibraltar shares rose 17 cents Tuesday to close at $24.53.