Boral wants building rebound as sales slip
Building materials supplier Boral has flagged that subdued construction of units and commercial property could affect second-half earnings, after first-half earnings slipped.
The company on Tuesday said the outlook for its second half was uncertain due to weakness in multi-residential and non-residential construction in Australia.
While all forms of building approvals rose 10.9 per cent in December, Boral said it was unclear whether this trend would continue or was a response to government stimulus.
Government schemes such as HomeBuilder have given financial incentives for building new homes during the pandemic.
Boral reported first-half earnings from continuing operations were down eight per cent to $215 million, compared to the previous first-half.
Sales dropped in Australia and North America.
Chief executive Zlatko Todorcevski said a decline in the building of units and commercial property in Australia affected results.
While the outlook for demand in Australia was uncertain, he said strong demand in North America was expected to continue.
Australian sales make up 53 per cent of Boral revenue, while the US comprises 38 per cent.
The company sells materials such as asphalt, cement, concrete and timber.
The group's net profit after tax rose 18.2 per cent to $161.4 million, yet the company downplayed this figure as $46 million profit came from businesses which Boral has sold.
Late last year, the company completed the sale of the Midland Brick business in Western Australia. Boral also announced it was selling its 50 per cent stakes in USG Boral, and Meridian Brick joint ventures in Canada and the US.
Shareholders will not receive an interim dividend. This was because net debt was higher than Boral's target of $1.5 billion.
The company said net debt will fall below this figure once it receives funds from the sale of USG Boral and Meridian Brick. Shareholders may then receive a payout.
The previous interim payout was 9.5 cents per share, 50 per cent franked.
Shares were down 4.99 per cent to $5.14 at 1355 AEDT.
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