The company paid A$740 million for Crane - which makes and distributes plastic pipeline systems, plumbing and electrical supplies and non-ferrous products.
The purchase, which was completed in March, coincided with a sharp downturn in Australian residential construction activity.
Fletcher Building said it was now looking at first half earnings of around $150 million for the current six month period to December 31, down from $166 million in the previous corresponding period.
That meant the company's result for the financial year to June 30, 2012, which will include a full year of earnings from Crane, was expected to be similar to the $359 million "pre-unusual items" result reported for 2010/11.
"It would appear that this warning is more due to across-the-board weakness in New Zealand, and more particularly in Australia, on top of difficult conditions in the steel division, rather than specifically due to Crane, but I suspect that going forward there will be a degree of focus on whether Crane can meet its acquisition expectations," Matt Goodson at BT Funds Management said.
The company was New Zealand's biggest in terms of market capitalisation before today, when it dropped into second place.
It is facing a number of issues, not the least of which is the fact that the start of rebuilding work in earthquake-stricken Christchurch will be further away than first thought, particularly since the force 5.5 earthquake which struck Canterbury last Sunday was likely to further delay rebuilding efforts.
Seismic issues aside, conditions in New Zealand have remained challenging, with continued low levels of activity in the residential and commercial construction sectors, the company said. The group's businesses exposed to the residential and commercial markets in New Zealand recorded lower earnings but infrastructure activity remained steady.
In Australia, a significant downturn in residential consents and continued weak approval levels in commercial construction have impacted the earnings performance of businesses in those sectors.
Fletcher Building's Australian subsidiary, Laminex, had been hit by its high exposure to the residential sector.
Conditions in the steel industry remained difficult, with surplus capacity globally coupled with the high Australian dollar adversely impacting earnings from the export of long steel product into Australia. Its Formica unit continued to see earnings growth in each of its three regions - North America, Europe and Asia.
"In New Zealand, no material improvement in trading conditions is expected in the first half of the 2012 financial year, and the timing of a sustained and meaningful recovery beyond that is uncertain," the company said.
"It's certainly a pretty challenging environment and it does not look like getting any better any time soon," Shane Solly at Mint Asset Management said.
