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Boral offloads stake in plasterboard business to Knauf for $1.4 billion

Boral is recruiting for quarry managers on a permanent basis in Dubbo NSW, Dunmore NSW, Moy Pocket QLD, Mount Bundey NT, and Deer Pack VIC.


Boral announced at its annual general meeting that it will offload its 50 per cent share in USG Boral for $1.43 billion through a deal with Gebr Knauf KG.

USG Boral is a joint venture between Boral and Knauf, with both companies previously owning a 50 per cent share prior to the deal. It includes a plasterboard-based business located in Australia, New Zealand, Asia and the Middle East.

Boral described the $1.43 billion offer as “compelling” after it saw an eight per cent drop in revenue in the USG Boral joint venture for the 2020 financial year.

The joint venture’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) was 25 per cent lower than the previous period.

“We have been working with Knauf for some time to find the best path forward for the business following Knauf’s acquisition of our joint venture partner, US Gypsum (USG),” Boral chief executive officer Zlatko Todorcevski said.

“We recognise that it makes sense for Knauf – being the world’s largest plasterboard player – to have 100 per cent ownership of the business.

“USG Boral is a great business, and very well positioned to perform strongly under the ownership of Knauf. The strength of the joint venture business and its prospects are fully reflected in the sale price as demonstrated by the attractive premium, which is a great outcome for Boral shareholders.

“The sale of Boral’s interest in USG Boral to Knauf will be a step to simplifying Boral’s geographic footprint and product portfolio.”

Boral CEO Zlatko Todorcevski. Image courtesy of Agg Business.

FY20 financial results
At the company’s annual general meeting, Boral chairperson Kathryn Fagg, who is set to retire in 2021, described 2020
as a “challenging year and a pivotal one for Boral”.

Sales revenue was at $5.67 billion – down by one per cent in the 2020 financial year, and also included a five per cent drop in revenue from Boral Australia.

Boral Australia’s EBITDA was 25 per cent lower than the previous year, while Boral North America’s EBITDA dropped by 28 per cent.

“Higher costs, lower margins and COVID-related production slowdowns and disruptions impacted results in all three divisions,” Fagg said.

After a hefty board renewal and chief executive officer transition, Boral is continuing to focus on weathering the storm of COVID-19.

“We made a decision to wait until FY2021 to complete the necessary work to adopt science-based targets and carbon emissions reduction pathways, so that we could take into account the outcomes of the portfolio review, and clearly understand how Boral can deliver reduction targets aligned with the Paris Agreement,” Fagg said.

Boral chairperson Kathryn Fagg.

Boral’s portfolio review found significant value in its Australian quarries, cement, concrete and asphalt businesses has underpinned its strengths.

“We have innovative products and a strong brand. We have made recent generational investments in quarries that now need to deliver results and we have good property positions with integrated land assets that can also deliver value when operating sites come to the end of their operational life,” Todorcevski said.

“But we also know that our cost base is higher than it should be and that we can deliver much better operating leverage from our assets.”

According to Todorcevski, the company will be aiming for a recovery in the coming months, and will address the improvement actions that it has identified through its portfolio review.

“We are focused on recovering and strengthening margins, improving return on capital employed, maintaining strong cash flows, and fully exploring the opportunities and rolling out the improvement actions identified through the portfolio review,” he said.

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