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Australia’s Boral announces 2H12 results

World Cement,

Australia’s Boral Ltd has released its results for 2H12. Sales revenue increased by 14% y/y to AUS$2.77 billion, although excluding acquisitions it remained fairly constant. Profit after tax for the period (before significant items) was announced as AUS$52 million, with a net after tax loss of AUS$25 million. The cost of net significant items, such as the restructuring programme in 1H12, redundancy expenses and asset impairment charges in relation to the suspension of clinker production at Boral’s Wuarn Ponds site, totaled AUS$77 million.

Total EBIT came in at AUS$112 million, up 3% y/y. However, earnings before tax varied across the company’s business divisions, with y/y improvements from Construction Materials but weaker performances from its Cement and Building Products divisions.

Commenting on the results, Boral CEO and Managing Director Mike Kane said: “In Australia, Construction Materials delivered a solid 25% improvement in EBIT, but Cement reported a 15% decline and Building Products reported a very disappointing AUS$18 million first half loss, following an AUS$11 million loss in the second half last year.”

“The improved Construction Materials result reflects strong volumes from resources and infrastructure projects combined with dry weather and the early benefits of restructuring. On the other hand, in the Cement division, the high Australian dollar and increasing production costs continued to impact, but we have taken action to replace Boral’s manufactured clinker in Victoria with lower cost imports”.

According to Kane, Boral’s Building Products operations were hit by rising costs, as well as higher import levels and domestic competition. Increased operational costs and declining volumes were also a factor in the 45% y/y fall in EBIT recorded by Boral Gypsum and Australian Plasterboard. However, growth in Asia following the acquisition of the remaining 50% interest in BGA helped to offset the decrease in earnings.

Discussing the company’s future outlook, Kane went on to add that: “Boral’s overhead structure is well on the way to becoming much leaner and more efficient, with around one quarter of functional and managerial positions coming out of the business in Australia. We have also continued with operational rationalisation activities. Combined, these cost reduction activities will deliver AUS$105 million of annualised savings from next year. Our cash generation from operating activities has also improved, increasing by AUS$96 million y/y, and we have identified around AUS$50 million of planned capital expenditure that can be deferred this year or avoided altogether. As a result, debt has reduced from AUS$1.52 billion to AUS$1.46 billion over six months”.

Adapted from press release by Louise Fordham.

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