Boral’s margins hit by weaker Australian demand

Boral’s margins hit by weaker Australian demand
Published: 17 August 2005

The weakness in the New South Wales market had a dampening effect on Boral’s overall results for the year to the end of June.  Group turnover rose by 3.5 per cent to Aus$4,297m (US$3,241m) and the EBITDA advanced by 3.1 per cent to Aus$819m (US$618m), but the trading profit only edged up by 0.7 per cent to Aus$604m (US$456m) and the pre-tax profit declined by Aus$1m to Aus$533m (US$402m).  The trading profit from the construction materials and building products divisions in Australia declined by 2.6 per cent to Aus$299m and by 1.9 per cent to Aus$156m respectively, while the US operations registered a 28.8 per cent rise to US$103m on a turnover 13.4 per cent higher at US$611m.  On conversion, these increases fell to 21.5 per cent to Aus$136m and 7.3 per cent to Aus$810m respectively.  The US profit advance was seen in bricks concrete tiles and fly ash, with fly ash volumes ahead and prices benefiting from higher US cement prices.  The comparatively smaller Asian business saw profits drop by some 37 per cent to Aus$18m (US$13.6m), principally because of lower plasterboard prices in Korea and Thailand.
 
The Australian construction materials operations constituted the main earner and posted a 3.1 per cent increase in turnover to Aus$2,164m (US$1,632m), of which the cement division contributed Aus$461m (US$348m), an increase of 5.0 per cent.  Cement shipments were broadly static but prices improved. Blue Circle Southern Cement increased profits as the benefit from higher prices and benefits from the kiln improvements at Berrima more than offset the negative effects associated with the improvements being made to clinker production at the Waurn Point works in Victoria.  Benefits from the 0.3Mta capacity increase should be seen from early in the new financial year.  Investment in cement bagging and dry mix operations at Maldon, NSW is set to contribute towards the end of the current financial year, while a 0.4Mta increase in cement grinding capacity at the Berrima, NSW works should be ready early in 2007.