Boral has been negatively impacted by floods in eastern Australia, as well as increased fuel and coal prices, leading to a drop in expected earnings for the 2022 financial year (FY2022).
The major Australian construction materials supplier owns dozens of quarries and concrete plants along the east coast and Boral chief executive officer and managing director Zlatko Todorcevski said the floods had struck millions of dollars from expected production rates.
“The impact on sales volumes of the extreme rainfall across New South Wales and Queensland in late February and early March have adversely impacted Boral’s earnings by about $23 million,” he said.
“The exceptional weather conditions have prevented us from delivering products to our customers in many regions and caused significant production disruptions to our operations.”
The Boral boss didn’t identify which operations had been impacted or their timeline back to full capacity, but the company expects earnings before interest and tax (EBIT) to be between $145 million and $155 million in FY2022.
Also impacting the company and the wider industry has been the conflict between Russia and Ukraine – two leading producers of oil.
Sanctions on Russian resources have had a significant impact on the cost of fuel around the world, with the price of wholesale diesel passing 206 cents per litre in parts of Australia.
Todorcevski said Boral’s earnings cut was also attributable to fuel prices.
“In addition, unusually extreme and rapid increases in the price of coal and diesel have recently occurred,” he said.
“This cost escalation is not expected to be recovered by our January and February product price increases, with the future cost impact based on the current forward prices.”
The company expected elevated fuel prices to continue impacting results for the remainder of the first half of 2022.