Shares of Granite Construction Inc. (GVA) are currently down 10 percent after reporting a lower profit for the fourth quarter, hurt mainly by decline in revenues and weak margins. Both earnings and revenues also came in short of Street estimates.
Watsonville, California-based Granite Construction's fourth-quarter profit declined to $18.0 million or $0.46 per share from $18.8 million or $0.48 per share in the prior year. Analysts polled by Thomson Reuters expected earnings of $0.63 per share for the quarter. Analysts' estimates typically exclude one-time items.
Commenting on the results, Chief Executive James Roberts said, "Our fourth quarter results highlight the strength of our Large Project portfolio as well as the challenging market conditions our Construction and Construction Materials businesses continued to face in the West."
Granite Construction's revenues dropped to $504.8 million from $539.5 million last year. Analysts estimated revenues of $609.9 million for the quarter.
Construction revenues slipped to $235.3 million from $259.2 million a year ago, while construction materials decreased to $54.9 million from $55.5 million. Large project construction revenues improved to $214.6 million from $211.6 million last year.
Gross margin declined sharply to 11.3 percent from 14.7 percent due to lower gross profit in both the construction and construction materials segments.
Moving ahead, Roberts was cautious on the outlook. He observed, "While we are optimistic that we will see some benefit from the residential building market towards the end of the year, we expect that our Construction and Construction Materials businesses will continue to face challenging market conditions throughout most of 2013."
GVA is currently trading at $31.77, down $3.40 or 9.67%, on the NYSE.
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