Fletcher Building's share price recovered some ground today after getting a hammering following the company's $110 million earnings downgrade.
Shares in the company which were trading at around $9.60 on the NZX on March 1 and this morning opened on the NZX at $7.95.
They recovered some of this ground today and climbed 3.77 per cent to $8.25.
Fletcher now has an NZX market capitalisation of $5.7 billion, down from its $7 billion before the news this month.
Hundreds of millions of dollars have wiped off its value following the announcement from chief executive Mark Adamson giving guidance of a $110 million downgrade for operating earnings for the June 30, 2017 year.
Shane Solly of Harbour Asset Management said the sector was hit by a number of issues which had a wider economic impact.
"It is reasonable to expect new construction costs will be higher in the near term as the construction industry focuses on managing risks. Higher economic costs of construction may limit economic growth near term. They may particularly constrain new commercial property development. Higher construction costs may also limit much-needed seismic strengthening of existing buildings," Solly said.
Finance experts wondered if there could be any further losses on Fletcher jobs after problems with Christchurch's new justice and emergency precinct and the NZ International Convention Centre.
"Several analysts are struggling to quantify this," one expert said.
Adamson said the company had found issues after extensions to timelines and resourcing issues on projects. These were far greater than previously thought at the half-year announcement in late February, he said.
Hear Adamson talk to analysts on the conference call last Monday.
On the conference call to analysts, Adamson said he took full responsibility for the situation with the business, personnel had been changed.
"The criteria for bidding major construction projects has been made more stringent and internal review processes for proposed and existing projects have been strengthened," Adamson said. This would drive improvements in future performance but a look back had revealed more issues than were initially expected.
"The review has found much weaker performance than we previously expected," he said. It was "regrettable" that only a few weeks ago, a small loss was forecast on only one project, he said.
Michael Midgley, NZ Shareholders Association chief executive, said: "Fletchers did respond to our request for an opportunity to discuss matters and we did that on Friday."