Budimex SA (BDX), Poland’s largest construction company, plunged to its lowest in more than three years after saying it will provide for a fall in the value of a railway building unit it bought last year.
The shares dropped 11 percent to 58.8 zloty, the weakest level since March 2009, as of 10:32 a.m. in Warsaw, extending its second-quarter slump to 31 percent. This compares with a 1.2 percent retreat in the Warsaw benchmark WIG20 index. Volume of shares traded daily so far in the session is more than twice the stock’s three-month average.
Budimex will write down 182.3 million zloty ($53.5 million) for PNI sp. z o.o., it said in a regulatory statement late yesterday. The provision, which is a result of the unit’s losses on contracts signed before the acquisition, will reduce the company’s 2011 earnings.
“Even though the loss will be booked in Budimex last year’s earnings, it shows that the quality of PNI’s orders is worse than expected,” said Andrzej Bernatowicz, an analyst at Dom Maklerski IDM SA, who has a buy recommendation on the stock.
Budimex also decided to spend 40 million zloty raised by PNI on the unit’s operations rather than initiate investments, it said. The builder bought PNI last year for 225 million zloty from the Polish railways company.
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