Property developer Stockland says earnings will fall by at least 10 per cent in the 2012/13 financial year because of the severely weakened housing market.
The company had previously warned its earnings per share (EPS) may weaken in the current year because of the deep cyclical low in the housing market.
Stockland shares were down 14 cents, or 3.9 per cent, to $3.41 after the warning.
"Unfortunately, it is now clear that this will be the case," managing director Matthew Quinn said in prepared remarks to be delivered to the company's annual general meeting on Wednesday.
"FY13 EPS is likely to be around 10 per cent below last year and could be up to a further five per cent lower if conditions don't improve in Victoria, where our profit per lot is significantly higher than the rest of our portfolio."
EPS in the 2011/12 financial year was 21.2 cents, down 33 per cent from the previous year.
Stockland's net profit of $487 million for 2011/12 was down 35.5 per cent from the previous year.
Stockland's residential business began the 2012/13 year with 700 fewer contracts on hand than 12 months earlier, and with no improvement in deposits in the first quarter property settlement volumes will be lower than the previous year, Mr Quinn said.
"Profit in our residential business is expected to be around $50 million lower this year than last year with potential downside of a further $30 million if conditions in Victoria don't improve," he said.
Profit margins are expected to improve in the 2013/14 year as new projects are completed, but Stockland will need two or three years of volume and property price growth to restore margins to previous highs, Mr Quinn said.