Boral deliver significantly improved operational performance

All four divisions deliver improved earnings with Australian Building Products reporting notable turnaround

BORAL Ltd have reported a 73% increase in net profit after tax to A$90 million for the six months ended 31 December 2013.The company’s sales revenue of A$2.87 billion was 4% above the prior year and earnings before interest and tax (EBIT) increased by 49% to A$168 million.

Boral’s chief executive officer and managing director, Mike Kane, said the improved performance reflected the benefits of cost realignment and restructuring programmes together with higher volumes from major projects, favourable weather conditions in Australia, and stronger market conditions in a number of key markets.

According to Mr Kane, each of Boral’s four divisions delivered improved earnings, with the Australian Building Products division reporting a notable A$23 million turnaround.

‘Our focus on improving Boral’s return on funds employed through the ‘Fix, Execute, Transform’ programme is delivering tangible results,’ he said.

‘During the period our previously announced cost-reduction programmes, which are essential to offsetting the inflationary pressures in our businesses, delivered a A$60 million benefit, and we expect to realize annualized savings from these programs of A$130 million in financial year 2014.

Mr Kane continued: ‘We have delivered A$212 million in cash proceeds over the last 18 months from divestments and land sales against our two-year target of generating between A$200 million and A$300 million of cash. In line with our stated objective, capital expenditure was contained at $114 million for the half year.’

Construction Materials & Cement, Boral’s largest division, delivered a 6% improvement in earnings driven by strong project activity, very dry weather conditions in New South Wales and Queensland, and the benefit of restructuring and overhead cost reduction initiatives.

The Building Products division’s significant turnaround from reported losses last year to a modest profit was achieved predominantly through a marked reduction in its cost base from portfolio rationalization and restructuring initiatives, as well as the tailwind of improving housing construction demand in New South Wales and Western Australia.

Boral Gypsum delivered a 30% increase in earnings with a particularly strong improvement in the Australian business and solid growth in demand across most of Asian markets where an 11% uplift in plasterboard sales volumes was experienced.

Markets in the US are also continued to strengthen, with losses from the Boral USA division down 23% in the first half and strong volume growth experienced across all US businesses.

On the outlook for the second half, Mr Kane said: ‘We expect the underlying performance in each of Boral’s four divisions to improve in the second half of the financial year compared to the prior comparable period.’