The Reece Ltd (ASX: REH) share price sank about 10% on Friday as the company released its latest trading update.
The plumbing and waterworks supplies company stated "underlying volumes continue to be subdued" as it navigates a challenging cycle.
Reece stated the challenging trading environment during the second half of FY25 continues to be driven by housing market softness.
As such, Reece expects Group EBIT for FY25 to be between $548 and $558 million.
That would represent a decline of more than 18% on FY24's result of $681 million.
Peter Wilson, Chairman and CEO of Reece Group, said Reece has not seen a material improvement in trading conditions in the second half of FY25.
In Australia and New Zealand, volume settings remain soft, and recent interest rate cuts have not yet translated to improved housing activity.
In the US, our high exposure to the residential new construction (RNC) sector continues to impact our performance."
While the bulk of Reece's operations are centred in Australia and New Zealand, Reece now has 261 stores in the United States.
Mr Wilson stated that housing units under construction remain down year on year, particularly in the US Sunbelt Region, where Reece operates.
Reece also noted that mortgage rates remain high and housing affordability continues to weigh on the US residential market.
We have seen increased competition across all segments of our US business from new market entrants and the slowdown in RNC, which has impacted profitability for the year.
Image source: Getty Images
No relief in sight
It's been a tough year for Reece shareholders.
The company's share price has shed almost 40% of its value over the past 12 months.
And the latest building approval figures from the Australian Bureau of Statistics do not offer much hope.
The number of private sector dwellings excluding houses dropped to 4,999 for April, down 19% on the previous month.
Still, as Reece shareholders head for the door, Mr Wilson is reassuring investors that things will turn around soon.
"We have seen similar cycles before and remain confident in our long term approach."
Director resigns
In other company news today, Reece stated that ex-NAB CEO Ross McEwan will resign from the company's board this month.
Mr McEwan said the move follows his recent decision to step down from the QinetiQ Group Limited Board.
"I will also be stepping down from the Reece board to devote my time and attention to my role as Chair of BHP Group Limited."
