There's a certain inevitability about Boral, the diversified building products group with exposure to the troubled Australian and US housing markets, as well as the booming resource and infrastructure industries.
No matter how confident the company becomes, no matter what it forecasts, something seems to pop up with worrying regularity to puncture any optimism.
A year ago it was expectations, for various reasons, of a net result steady with 2006's. Nope, it finished down 17.7%.
There were hopes some recovery might be seen in the NSW home building industry, its major area of activity, but while there has been a slight up-tick, the company is now looking for the recovery to happen in 2009.
Supporting Boral was the Commonwealth Bank which yesterday said it was seeing some signs of an upturn at the moment.
The US housing sector was forecast to soften, but not to undergo the gut wrenching slump that has flowed from the sub-prime mortgage mess.
And, the company's share price has fallen steadily in the past 2 months from around $9.20 to around $7.16. In fact, yesterday's fall of 16c in a market that was so savagely sold off, wasn't such a bad outcome.
So why the sharp run-up (it was just over $6.00 11 months ago)? Well, with the Cemex bid for Rinker, speculation about a takeover for CSR (another building products group) and the UK-owned Hanson changing hands, punters picked Boral to get the next loving glance from private equity.
If it came, we are none the wiser but the share prices fall does reflect the new reality for private equity: there ain't no deals out there in these worrisome days.
Investors seem inured to Boral's woes and probably wonder if it can go any lower.
The company said 2007 net profit fell to $298.1 million, from the $362 million earned in 2006, with the decline in earnings in the US and the Australian housing sectors the major drivers.
Boral has 40 per cent of its business in NSW, which recorded a six per cent fall in dwelling approvals during 2007.
But CEO Rod Pearse says the company is confident, after looking at forecasts by BIS Shrapnel, of an upturn in NSW sometime in 2009.
"But I don't think we should underwrite the long-term potential of the NSW economy…
"If you look at what BIS Shrapnel is saying, we agree that there will be a strong recovery over the next five years, starting as I said from around fiscal year 09.
"It will come back."
"EBITDA of $762 million were down $61 million because of the volume-driven $90 million decline in EBITDA from Boral's US operations," the company said. Offshore EBITDA fell by $98 million, or 40%, to $150 million.
Net profit fell because of higher depreciation and interest costs which totalled $35 million.
Overseas operations accounted for 20 per cent of Boral's total earnings, compared to 30% in 2006.
"Following strong market conditions in FY 2006, the US market experienced a severe downturn in single family home construction across all major markets which negatively impacted shipments in the brick and roof tile businesses," the company said.
However, Boral said conditions continued to improve in Asia, particularly in a number of key plasterboard markets.
In Australia, EBITDA rose 6 per cent to $605 million, despite a continued downturn in the local housing market.
"The continued downturn in Australian dwelling activity, especially in NSW, continued to negatively impact earnings adversely, affecting volumes and manufacturing costs," Boral said.
"Earnings from construction materials businesses, however, were stronger on the back of major infrastructure project work and non-dwelling activity, particularly outside NSW.
"Price gains and growth initiatives also benefited the results."
Boral chief executive, Rod Pearse, said he expected earnings from the Australian construction materials businesses to improve in 2008.
But he said dwelling commencements would be well below underlying demand levels of 170,000 starts.
"In 2007/08 we expect Australian dwelling commencements to be around 145,000 to 150,000 starts compared to the estimated 149,000 starts in 2006/07," he said.
"This is well below underlying demand levels of around 170,000 starts.
"Building products results are expected to soften as a result of the weakness in dwelling volumes.
"We expect earnings from our construction materials businesses in Australia to continue to improve as a result of an anticipated increase in non-dwelling and infrastructure activity in 2007/08 and the continued flow through of concrete and quarry price increases that were implemented effective 1 April 2007."
Mr Pearse said US housing conditions would continue to deteriorate in 2007/08, impacting on brick and roof tile sales.
"In the USA, forecasters currently expect housing starts to be 1.4 to 1.5 million starts in the 2007/08 financial year, which equates to around a three per cent to 10 per cent decline year on year. This will reduce brick and roof tile sales and production volumes and earnings compared to 2006/07 levels."
Boral said it was too early to comment on fiscal 2008 outcomes given volatile conditions in some of its key markets.
The company said it would provide an update on trading conditions at its annual general meeting in October.
"Despite the current depressed USA and Australian housing markets, we have long-term confidence in these key markets. We believe that the underlying demand level for dwellings in the USA is around 1.8 million starts (excluding manufactured housing) and in Australia it is around 170,000 starts per annum.
"We expect continued growth and competitive market conditions in Asia for the remainder of FY2008
