On the face of it a very solid result from the building materials group Boral (BLD) which boosted earnings 48% and the final dividend by 19%.
And yet the market gave the result a big thumbs down with Boral shares dropping 8% to $5.78, much worse than the 1.2% rise in the wider market.
The higher final dividend of 9.5 cents a share saw Boral boost its full year payout to shareholders by 20% to 18 cents a share.
On the face of it the result was pretty good and a tribute to the way CEO Mike Kane has got Boral performing well here and the US (where housing is now at levels stronger than before the GFC in 2007-08).
But perhaps investors wanted some actual numbers for profits in the outlook for 2016 – after all Flight Centre managed to do so yesterday and its shares soared 15% at one stage.
In his outlook comments, Mr Kane said the company’s fortunes this year would depend on the continued strength of the Sydney construction market, as well ongoing corporate restructuring and cost-cutting.
"These benefits will be needed to offset a depressed Queensland construction market, subdued activity in roads, infrastructure and engineering construction and a further tapering off of LNG major project volumes," Mr Kane said.
Materials demand for the construction of Australian roads, highways, subdivisions, bridges and other engineering work is expected to "remain softer in the 2016 financial year, before a multi-year recovery starts late next year.”
Those comments could be the reason for the weakness in the shares yesterday.
But the company is looking for another solid performance from the newly profitable US housing operations which will be helped by further strength in the US dollar (and weakness in the value of the Aussie, which translates into higher earnings from the US in Aussie dollars).
The solid performance of the Australian operations has been well-established for a while now, especially in NSW and Victoria where the company has been riding the housing boom.
Bulk building products for the road building and infrastructure sector have been a bit weak and the company has had to fight a bitter battle with the CFMEU (Construction Forestry and Mining Union) which has cost Boral millions of dollars.
But the big feature of the latest result was the solid return to profitability for the first time since the financial crisis for the US building products business.
That was a big factor in the 48% jump in full year profit to $257 million.
Revenue from continuing operations in the year to June was $4.3 billion for the year ended June 30, in-line with last year’s figure.
Group earnings before interest and tax jumped 21% to $357 million as higher property earnings offset declines in road, infrastructure and engineering projects (the bulk products sector).
The US business, which Mr Kane ran before becoming CEO, swung to profitability.
“After a protracted period of depressed market activity in the USA following the global financial crisis, Boral USA returned to profitability in FY15 with positive $6 million EBIT," Mr Kane said yesterday.
In July Boral upgraded its earnings expectations for 2014-15 to between $240 million and $250 million on the back of strong earnings in its property division.
Mr Kane said the business has now moved well into the second two phases of his "fix, execute, transform" strategy.
“We’ve improved Boral’s cost base, strengthened the balance sheet and we are managing our portfolio of businesses more efficiently," he said in yesterday’s statement.
