Shares in cement maker Adelaide Brighton Ltd [ASX:ABC] fell by more than 4% today on heavy volume. The shares have retreated by nearly 22% in value since hitting an all-time high in February.
Yesterday Adelaide Brighton announced a push into the Queensland construction materials market, and shored up its position in its home state of South Australia.
The company has bought two integrated aggregate and pre-mixed concrete businesses, in addition to the previously-announced acquisition of a quarry from Penrice Soda Holdings Ltd [ASX:PSH], for a total of $174 million.
All of this supports Adelaide Brighton’s strategy of securing more downstream construction materials businesses.
The market is viewing this as a defensive move for a company on the back foot, following a profit downgrade and a major contract loss earlier this year.
Free Reports:
More importantly, this nixes any hope shareholders might have had of receiving a special dividend. That’s why the share price has fallen today.
Investors shouldn’t panic because of today’s share price action. These acquisitions will help Adelaide Brighton meet rising demand for cement and other building materials.
As long as housing construction and infrastructure development continue apace, Adelaide Brighton’s future will stay rosy.
Its products aren’t very sexy, but Adelaide Brighton’s long term track record of earnings growth speaks for itself.
Cheers, Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator
Join Money Morning on Google+
The post Why the Adelaide Brighton Ltd Share Price Slumped Today appeared first on Stock Market News, Finance and Investments | Money Morning Australia.