Nov. 14 (Bloomberg) -- Taiheiyo Cement Corp. fell to a two- year low in Tokyo trading after Asia's biggest producer of the building material cut its full-year profit forecast. Merrill Lynch Japan Securities Co. reduced its target price on the stock.

The stock fell 4.9 percent to close at 292 yen on the Tokyo Stock Exchange, the lowest since June 17, 2005. Shares of the Tokyo-based company had the second-biggest decline among shares in the Nikkei 225 Stock Average.

Taiheiyo Cement follows rival Sumitomo Osaka Cement Co. in lowering its annual profit target because tightened regulations in Japan led to a decline in housing starts, and earnings from North America, the most profitable region for Taiheiyo Cement, declined on the U.S. housing recession. Merrill Lynch analyst Yoshihiro Hashimoto cut his 12-month target price on the stock 19 percent to 460 yen, while reiterating his ``buy'' rating.

``The risk of a downward revision in response to declining housing starts in Japan and the U.S. had been expected to a certain extent,'' Hashimoto said in a report issued yesterday. ``As the size of the declines in housing starts in Japan shrinks, conversely, the size of the declines in cement shipments there is also expected to shrink.''

Net income may fall 7.8 percent to 22.5 billion yen ($202 million) in the year ending March 31, 2008, from 24.4 billion yen a year earlier, Taiheiyo said yesterday. That's 30 percent short of its forecast in May.

Japan's infrastructure ministry in late June enacted tougher laws that caused waiting times for building permits to last up to four times as long, following a 2005 scandal involving falsified earthquake resistance data.

Operating profit from North America, the most profitable region for Taiheiyo Cement, dropped 13 percent from a record a year earlier in the first half, the company said. Taiheiyo owns three plants in Arizona and California, generating about 14 percent of sales from North America.