Pentair shares dip 17% on dour forecast amid weak pool sales

U.S.-listed shares of Pentair PNR.N fell 17% on Wednesday after the water technology firm cut its annual forecast, citing tepid demand in its pool segment as rising costs pressure spending on outdoor living projects.

London-based Pentair's warning could heighten concerns about demand across the pool-equipment supply chain, including at major distributor Pool Corp POOL.O and rival Hayward Holdings HAYW.N. Investors have been looking for signs that the industry's inventory correction following a pandemic-driven boom is nearing an end.

• Pentair shares were trading around $63, having declined 28% so far this year. Wednesday's drop could wipe off about $2 billion from its market value, if losses hold.

• The reduced profit and revenue forecast underscores a deeper-than-expected slowdown in the company's pool business, as distributors slash inventories ahead of next year's selling season.

• Pentair said its second-quarter results were hurt by lower sales in the segment as distributors trimmed inventory amid high interest rates and elevated inflation.

• Its pool segment sells pumps, filters, heaters, automation systems and other equipment for residential and commercial swimming pools.

• Stifel analyst Nathan Jones said Pentair's preliminary quarterly results and forecast cut were driven by a broader inventory destocking that Stifel estimates caused Pentair's pool segment revenue to fall 40%-42% from a year earlier.