Boral Limited’s Shares Tumbled On ASX After Releasing Its First-quarter Trading Update At AGM

Boral Limited (ASX: BLD) held its Annual General Meeting on 30 October 2018, following which the share price of the company decreased by 2.487 percent.

In FY 2018, the company witnessed a substantial lift in the earnings from Boral North America as a result of the first full year of ownership of Headwaters, as well as higher earnings from Boral Australia and a solid result from USG Boral. The company’s earnings before interest, tax, depreciation, and amortization (EBITDA) increased by 47 percent to more than $1 billion in FY 2018 as compared to last year. The net profit before tax and amortization and significant items of the company also increased by 47% to $514 million in FY 2018 as compared to last year. The Company’s Board declared a final dividend of 14 cents per share which represents a payout ratio of 66 percent.  After the sale of the Denver Construction Materials business, which was completed in July, the net debt of the company decreased to around $2.28 billion in FY 2018 which was $2.33 billion in the last year. The cash position of the company is expected to improve furthermore after the recent divestment of the Texas-based Block business which will deliver US$156 million of proceeds.  Boral Australia delivered an EBITDA of $634 million in FY 2018 which is 15% more than EBITDA of FY2017. The EBITDA of Boral Australia was impacted by the strong growth in infrastructure and strong growth in commercial construction. Boral North America reported EBITDA of A$368 million in FY 2018 which was A$111 million in FY2017. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

In the first quarter of FY 2019, the Infrastructure and commercial activities of Boral Australia were strong, and they are growing. The improvement programs are progressing well for Boral Australia and the prices are positive in most markets. For Boral North America, adverse weather has caused significant delays in construction, including extremely high September rainfalls across Texas, Midwest and the Northeast. The delivery of synergies is continuing to progress well, and the company is on track to deliver in line with the targeted US$25 million in FY2019. For USG Boral, the competitive pressures continue in Thailand and Indonesia, but demand is expected to rise in 2HFY19. USG Boral continues to deliver innovative solutions to its customers and is growing plasterboard capacity in attractive high growth markets.

The company has refined the outlook for FY 2019, however, it is largely unchanged from the previous guidance which provided in August month. The company is expecting high single-digit EBITDA growth from Boral Australia and EBITDA growth of around 20% or more from Boral North America after adjusting for the sale of the Block business. The property earning of Boral Australia is expected to increase by $20 million in FY 2019. Further, the company is expecting that earnings will grow by around 10% in USG Boral.

In the past six months, the share price of the company decreased by 18.17 percent as on 29 October 2018. BLD’s shares traded at $5.490 with a market capitalization of $6.6 billion as on 30 October 2018 (AEST 3:22 PM).


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