Boral’s Shares Down By Over 7% On ASX Following The Announcement Of Revised FY 2019 Guidance


Australia’s leading construction materials and building products supplier, Boral Limited (ASX: BLD) today (4 February 2019) announced that it is expecting its EBITDA (earnings before interest, tax, depreciation, and amortization) for the first half of FY 2019 to be around $485 Mn.  For the first half of the financial year 2019, the company is expecting its net profit after tax (NPAT) to be around $200 Mn.

As per the company’s announcement, the EBITDA in the first half of the financial year is impacted by the lower earnings due to the sale of Denver Construction Materials in July 2018 and Texas Block in November 2018. Further, the EBITDA growth from Boral North America was offset by lower earnings in Australia and a lower contribution from USG Boral. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]

Due to the results in the first half of FY 2019 and trading for January, combined with a detailed review of improvement opportunities to claw back first half volume shortfalls and market outlook for the remaining year, the company has revised its FY 2019 divisional guidance.

The company is expecting its FY 2019 EBITDA to be higher than FY 2018 for continuing operations with a skew to the second half. Further, the company is expecting that its FY2019 EBITDA will be supported by the EBITDA from Boral Australia which is going to be similar to FY 2018 if Property Earnings are excluded. The FY19 EBITDA will also be supported by the Property earnings in the second half of FY 2019 which is expected to be around $30 Mn compared to $63 Mn in FY2018. The company is expecting the FY2019 EBITDA growth from Boral North America to be around 15 percent in US dollars, excluding discontinued operations. The company is expecting slightly lower profits from USG Boral.

It is expected that the company will announce its interim FY 2019 results on 25 February 2019 and at the same time, it will also provide a comprehensive review of the first half performance.

Below are the primary Reasons which impacted the company’s performance in the first half of FY 2019 include –

  • At Boral Australia division, although the Underlying demand remains strong and the business is delivering good returns, the first half earnings have been impacted by volume lags and delays to major projects and infrastructure, extreme rainfalls on the east coast in October and a less favorable product and geographic mix shift.
  • At Boral North America division, although the delivery of Headwaters acquisition synergies is progressing well, the first half was impacted by above average rainfalls in key US states, which slowed volumes in most businesses. Moreover, the underlying demand growth is moderate while growth rates are mixed geographically, with Roofing benefiting from strong growth.
  • At USG Boral division, although the company witnessed Strong results from Australia, the operations in South Korea have been majorly impacted by a cyclical market decline and intensifying competition and was also affected by Typhoon Soulik in the September quarter.

Today the company also clarified regarding the sale proceeds from Texas Block business which are around US$156 million, consistent with the anticipated proceeds as announced to the market on 18 October 2018. BLD’s shares traded at $4.580 with a market capitalization of circa $5.79 billion as on 4 February 2019. (AEST 12:57 PM).


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