Construction materials group Boral Ltd said its underlying earnings remain strong despite net profit for the six months to December falling to A$179.7m from A$185.8m a year earlier. It said the reported profit was affected by a one-off cost of A$11.3m, representing expenses incurred in relation to a stalled bid for cement maker Adelaide Brighton Ltd which has left Boral with a 19.9 per cent interest.
As well, the group said plasterboard operations in Asia were affected by a cyclical downturn in South Korea and competitive tensions in Thailand. Boral said the value of the shareholding in Adelaide Brighton has increased on a pre-tax basis by around A$35m since its acquisition in December, which was not taken into account in the half year result.
It said underlying profit after tax rose three per cent to A$191m while underlying earnings per share increased to A$0.328 from A$0.321 for the half year
Boral chief executive Rod Pearse said, subject to weather and exchange rates, Boral’s underlying profit after tax in the June half year is likely to to be comparable to the result achieved in the first half. "In Australia, we anticipate continued softening in housing in the June half as lower approvals flow through to activity," Pearse said. But, he said, increased approvals for non-dwellings are expected to contribute to a modest increase in non-dwelling work done and activity in major roads and infrastructure projects is likely to strengthen further.
"Overall, we anticipate that Australian market activity for the full year will be broadly comparable to last year," Pearse said. In the US, he said, earnings should continue to reflect strong market conditions as well as an initial contribution from the newly acquired Denver concrete and quarry businesses. In Asia, Pearse said, full year earnings are likely to be impacted by current market challenges in South Korea and Thailand for the group’s plasterboard joint venture but Boral’s other operations in Asia should continue to benefit from underlying product penetration and economic growth across the region. "Across Boral’s portfolio, we expect operational improvement programmes and growth initiatives to contribute more strongly to the result in the second half than in the December half," Pearse said.