The building materials manufacturer announced it had sold its share in the joint venture (JV), trading as Boral CSR Bricks, to CSR for $133.9 million. The sale was effective as of 1 November.
As previously reported by Quarry, Boral CSR Bricks officially began operating on 1 May, 2015 after both parties agreed to combine their east coast brick operations, encompassing 12 manufacturing sites across New South Wales, Victoria, Queensland, South Australia, Tasmania and the ACT.
Boral will recognise a post-tax profit on the sale – estimated to be between $20 million and $25 million. It will be included as a significant item in its 2017 financial report, according to a company statement.
The JV netted Boral post-tax earnings of $11.7 million in the year ended 30 June 2016 and as a result of the sale it expects to have around $6.5 million lower equity earnings in 2017 relative to the previous year.
Boral CEO and managing director Mike Kane said that while the JV had performed well, the time was right to realise value for the business and redirect capital on its core operations.
“Boral’s strategy has consistently been to optimise assets to maximise our returns across our Australian building products portfolio, including realising value when the time is right,” Kane explained.
“Since its formation, the east coast bricks joint venture has performed well and we have worked hard over the last 18 months to integrate our businesses and deliver operational and overhead efficiencies. As a result, we have together created a more sustainable business.”
Boral retains ownership of a brick site in Scoresby, Victoria, which it will continue to lease to CSR with an option to terminate the contract in 2025 with three years’ notice.