Trailer Magazine

Boral well-placed to deliver growth

  • Posted on Wednesday 28th, August 2019.

Building material company, Boral, has reported that its FY2019 results reflect continued strength in Australian infrastructure activity.

The latest financial results also reflect Headwaters acquisition synergies and benefits from improvement programs offset by the downturn in housing activity and lower property earnings in Boral Australia, a housing market slowdown in Boral North America and a contraction in USG Boral’s earnings due to the downturn in South Korea.

Boral reported a Net Profit After Tax (NPAT) before amortisation and significant items of $486 million for the year ended 30 June 2019.

NPAT before significant items was $440 million, down seven per cent.

Statutory NPAT was $272 million down 38 per cent on FY2018, reflecting significant items of ($168 million) including a net impairment of $174 million for the Meridian Brick joint venture.

Reported sales revenue of $5.863 million steady on FY2018 and sales revenue for continuing operations of $5.801 million up four per cent despite a 15 per cent decline in Australian housing starts and a two per cent decline in the US housing market.

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of $1.037 million compared with $1.056 million last year. EBITDA for continuing operations of $1.033 million was up two per cent reflecting a $66 million EBITDA lift from Boral North America, partly offset by lower earnings from Boral Australia, including $30 million of lower property earnings and a lower contribution from USG Boral.

Full year Headwaters synergies of $32 million USD slightly ahead of plan with total synergies of $71 million USD now delivered at end of year two.

“Boral’s full year results demonstrate the benefits of strong infrastructure activity in Australia and resilience of our underlying businesses, together with implementation of improvement initiatives and cost reduction programs across the company,” said Boral CEO and Managing Director, Mike Kane.

“While we have seen a 15 per cent decline in Australian housing starts, lower Australian property earnings and lower than expected growth in North America, revenue from our continuing operations was up four per cent and EBITDA improved two per cent.

“We also achieved better than expected Headwaters acquisition synergies, delivering $71 million USD in synergies to date, with our four-year synergy target of $115 million USD remaining firmly in sight.

“Our business is not immune to market cycles, or adverse weather, and in response to softer market conditions and extreme rainfall events in the US, we have delivered tangible benefits this year through improvement initiatives and cost reduction programs, with more expected in FY2020,” he said.

Kane said there were improvement in employee and contractor safety, “with a recordable injury frequency rate of 7.5 representing a 14 per cent improvement for the year”.

He also explained that the underlying business saw top line growth in Thailand, China, Vietnam and India and a steady contribution from Australia which was was primarily offset by a cyclical decline in South Korea and
heightened competition in Indonesia.

Commenting on the outlook for FY2020, Kane expects continued infrastructure growth for the years to follow in Australia “… with forecasters expectations of a more modest downturn in residential construction relative to past cycles”.

Last year, Boral was awarded the Queendland Health & Safety Innovation Award for developing a dual prop system to secure trailers thereby improving safety.

(Image: Boral CEO and Managing Director, Mike Kane.)

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