The building and construction materials supplier reported a 64 per cent increase in net profit after tax to $173 million for the year ended 30 June 2014 – a significant recovery from the previous corresponding period which recorded a $212 million loss.
The company’s earnings before interest and tax (EBIT) were also up 29 per cent to $294 million, and Boral was able to reduce its debt from $1.45 billion last year to $718 million by the end of the 2014 fiscal year.
Boral CEO and managing director Mike Kane partially attributed the strong results to “improved housing activity in Australia”, particularly in New South Wales, Queensland and Western Australia. He noted that the company’s building products division contributed $8 million to its EBIT – a “substantial $48 million turnaround from the division’s reported losses last year” – while its construction materials and cement division contributed $277 million.
The company’s focus on portfolio rationalisation and restructuring was also said to have played a major part in the company’s improved performance, along with ongoing housing market recovery in the US and continued growth in Boral’s markets in Asia.
Outlook for 2015
Although Kane was largely positive about Boral’s results, he stated that there were still challenges ahead and that the company would continue to focus on restructuring and other initiatives to improve underperforming businesses, including its global bricks business. {{image2-A:R-w:220}}
“While we are continuing to work on portfolio improvements to better position Boral for the long term, we are maintaining our short-term focus on cost reductions to offset inflationary headwinds – particularly as pricing remains challenging in some key markets,” he said.
Kane predicted that in the coming year, the strength of Australia’s housing market and non-residential activity would be offset by a slowdown in roads and infrastructure activity, but anticipated that the building products division would still approximately double this year’s $8 million EBIT contribution in the next corresponding period.
He added that the construction materials and cement sector was also expected to continue delivering a strong result in the coming year, although he noted “expectations could be dampened if the inability to realise price increases continues”.
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