High Expectations Hurt Boral
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Like Cochlear, Boral shares came under early pressure after the building products group reported for the December half year and fell a touch short of some of the optimistic estimates for the company from some investors.
So down went the shares by around 5% before the grown ups appeared to drag the shares back from there they came - the ended the day on $7.328, down 2%.
Boral said first half net profit rose 13% as it benefited from the first full half year’s contribution from newish US acquisition, concrete ingredients maker Headwaters Inc.
Net profit was $173 million for the six months to the end of December, up from the $153.4 million for the first half of 2016-17 and missing estimates around $187 million.
Interim dividend was edged up half a cent to 12.5 cents from 12 cents a year, which was not the most confident of moves by the board.
Total revenue rose 40% to $A2.94 billion from $A2.09 billion last year. Boral doubled its US presence last year with the $1.8 billion purchase of Headwaters, maker of concrete ingredient fly ash.
Chief executive Mike Kane says the results confirm that Boral's transformation strategy is on track.
"It is very clear that we are seeing synchronised global growth benefiting all three divisions," he said referring to the company's segments Boral Australia, USG Boral and Boral North America.
Earnings in the company’s largest division, Boral Australia, rose 12% to $294 million, while the USG Boral plasterboard joint venture fell 1% to $149 million as a result of one-off costs.
The newly formed North America division, which includes Boral USA as well as Headwaters, delivered earnings of $184 million compared to just $41 million a year ago.
The division is expected to see significant EBIT growth for the full year to reflect the acquisition, synergy benefits and underlying market growth, with most of the gains skewed to the second half of the year, Mr Kane said yesterday.
Strong growth in infrastructure and non-residential activity is expected to underpin volume growth in FY2018, Mr Kane said. Boral expects continued growth across all businesses in fiscal 2018, including a significant lift in earnings from Boral North America, Chief Executive Officer Mike Kane said.
The company said Boral Australia, the company's biggest segment, is expected to report a high single-digit growth in core earnings for the full-year, on increased infrastructure and non-residential activity.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.