International News

Boral back in the black

The company reported a 73 per cent increase in net profit after tax to $90 million for the six months ending 31 December, 2013, in line with guidance provided on 28 January, 2014.
Boral is Australia’s largest construction materials and building products group. It reported higher earnings for all four of its divisions and a four per cent rise in revenue to $2.87 billion for the six months. The company pre-released its $90 million earnings two weeks ago to correct low earnings forecasts in the market.
Mike Kane, the Boral CEO and managing director, said that the improved performance reflected the benefits of cost realignment and restructuring programs, together with higher volumes from major projects, favourable weather conditions in Australia and stronger market conditions in a number of key markets.
Since assuming his position Kane has discarded 1000 jobs, moved Boral’s head office from the Sydney CBD to North Sydney and overhauled his senior executive team.
Now each of Boral?s four divisions has delivered improved earnings with the Australian Building Products division reporting a notable $23 million turnaround. 
?During the period our previously announced cost reduction programs, which are essential to offsetting the inflationary pressures in our businesses, delivered a $60 million benefit, and we expect to realise annualised savings from these programs of $130 million in financial year 2014,? Kane said.
?We have delivered $212 million in cash proceeds over the last 18 months from divestments and land sales against our two-year target of generating between $200 million and $300 million of cash. In line with our stated objective, capital expenditure was contained at $114 million for the half year.
Construction materials division leads way
Boral?s largest division of Construction Materials & Cement delivered a six per cent improvement in earnings driven by strong project activity, very dry weather conditions in New South Wales and Queensland, and the benefit of restructuring and overhead cost reduction initiatives.
The division?s underlying performance in the second half of this year is expected to improve over the prior comparable period.
?The Building Products division?s significant turnaround from reported losses last year to a modest profit was achieved predominantly through a marked reduction in its cost base from portfolio rationalisation and restructuring initiatives, as well as the tailwind of improving housing construction demand in New South Wales and Western Australia,? Kane explained. ?We expect the underlying performance in each of Boral?s four divisions to improve in the second half of the financial year, compared to the prior comparable period.?
Compared with its peers Adelaide Brighton Ltd, Brickworks Limited and CSR Limited, Boral’s share price has significantly lagged over the past 12 months. Investors responded well to the news, with Boral shares reaching $5.33, their highest point since March 2011 when they were $5.42.
Sources: Boral Limited, Business Spectator, Sydney Morning Herald, Nine News

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