House malaise hits Bingo
Garbage handler feels pinch from weak property
GARBAGE handler Bingo Industries says it has missed its forecasts for first-half buildingwaste growth due to slowing construction activity, joining a host of firms feeling the pinch from a property downturn.
Bingo’s shares fell by almost half on yesterday’s 14.5 per cent guidance downgrade, which follows weak results at businesses from car repairers to building suppliers, developers and realtors as the sharpest home price falls in a generation reverberate through the economy.
Tighter lending, higher taxes on foreigners and an apartment glut have wiped out nearly two years of property price gains in recent months, which has pushed construction approvals to five-year lows and squeezed retailers as consumers tighten up.
Bingo’s revised underlying earnings guidance is now $92 million to $96 million, down from initial predictions of $108 million to $112 million.
“I think what Bingo is telling us is that overall the property cycle is weak and it’s going to remain weak,” said Mathan Somasundaram, market portfolio strategist at stockbroker Blue Ocean Equity.
It also shows that a slowdown in construction is no longer just turning up in forward indicators, but already being felt, as the Sydney-based company said growth at its building and demolition collection businesses (pictured) was slower than forecast.
“Pricing is actually going backwards,” Bingo chief executive officer Daniel Tartak said, citing competition. Bingo shares had their worst day since listing in 2017, plunging 45 per cent in early trade.
The property downturn has put investors and the central bank on the lookout for signs of a broader economic malaise.
Realtor McGrath yesterday posted a first-half loss and said market conditions were expected to remain soft in 2019.
Housing classified websites REA Group and Domain Holdings Australia have forecast slower growth, building supplier Boral has cut its earnings outlook and auto sellers and repairers have reported weak results. Developer Mirvac Group and retailer JB Hi-Fi have bucked the trend.