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Boral withdraws its FY2020 earnings guidance

 

Boral’s FY2020 earnings guidance has been dropped after the coronavirus outbreak has blurred estimations.

Boral has withdrawn its FY2020 earnings guidance, attributing its decision to the coronavirus (COVID-19) outbreak.

Boral managing director Mike Kane assured investors the company has not seen a significant drop in products demand outside of China but early signs suggest demand may continue to shrink.

“Given the high level of uncertainty regarding the spread and duration of COVID-19, the negative impact on FY2020 earnings cannot be estimated at this point,” he said. “While we have not seen a significant deterioration in demand for our products as a result of direct and indirect COVID-19 impacts, other than in our USG Boral China business, we are now starting to see signs of impacts in our other markets.

“We expect market conditions will worsen as a result of temporary lockdowns and restrictions imposed to contain the spread of the virus.”

Kane said Boral’s business continuity and scenario planning is underway, aiming to reduce supply chain risks and interruptions to business.

“Boral has been taking measures to help manage the spread of the virus and to help ensure the safety and welfare of our employees, contractors, customers and other people coming to our sites,” he elaborated. “We are working closely with our customers to respond quickly to changes in their activity, and we are well prepared to curtail production as required.”

Boral has no debt covenants based on earnings and holds a high level of liquidity in its multi-currency syndicated loan facility.

The company has been seeking to form a new 50:50 joint venture with plasterboard multinational Knauf in Asia. As part of that partnership, Boral was hoping to regain a 100 per cent ownership stake in USG Boral’s Australian and New Zealand operations, with a call option for 50 per cent of that stake to be passed to Knauf within five years. However, Boral has now arrived at the view that the Australian Competition and Consumer Commission is unlikely to approve the call option. A range of potential options will be examined.

 

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