Australia’s Boral sees year profit down 15 per cent

Australia’s Boral sees year profit down 15 per cent
Published: 27 October 2006

Australia’s second-largest building materials maker, said on Friday it expected a 15 per cent drop in profit this year due to tougher conditions than anticipated in its main markets. 
Boral’s shares initially fell nearly nine percent on the cut from its earlier forecast for flat profits in the year to end June 2007, before recovering partly to stand down over four per cent. The new outlook was worse than analysts had feared, after Boral warned last week that it had suffered a poor first quarter. 
"This is a pretty material downgrade, and there’s a lot more detail in terms of where it’s coming from," said Andrew Sutherland, a partner with Perennial Growth Management. 
Boral said first-half profit after tax, for the six months to December 2006, was also likely to be around 15 per cent below a year ago, as economic conditions in its key US. and New South Wales markets, which together make up about 60 percent of earnings, were worse than anticipated. 
"Whilst we were expecting a slowdown in the U. housing market, which accounts for about 30 per cent of Boral’s earnings, we have been surprised by how sudden and sharp the slowdown has been in the first quarter of the year," Managing Director Rod Pearse said in a statement ahead of the group’s annual meeting. 
The new forecast implies that Boral expects a full year net profit of around A$308m (US$235m), compared with broker forecasts of around A$345.5m.
The warning came after data released overnight showed U.S. new-home sales had picked up in September, and former U.S. Federal Reserve Chairman Alan Greenspan said the December quarter should be better than the September quarter for housing.