Investors were left twixt and tween after the Boral (BLD) annual meeting yesterday. The outlook remains solid and forecasts haven’t changed, and the company hinted at capital management options if there are no acquisitions that fit its criteria.
In fact it was a meeting dominated by caution, and yet the shares eased 1.8% to $5.41, a slightly larger fall than the 1.4% dip in the wider market.
Shareholders couldn’t work out if the caution on spending money on a big acquisition was good news, and whether the flat outlook and capital management options were also positive.
BLD 1Y – Boral offers cautious outlook
Outgoing Boral chairman Bob Every made it clear to the meeting that the company wasn’t looking to make a large acquisition.
In his final address as chairman, Every played down market analysts talk that the company was looking to use its $500 million to $800 million of balance sheet capacity to make a large acquisition in the not too distant future.
"While Boral has the means to grow by acquisition over the medium to long term time horizon, there are no significant acquisitions currently on the table," he said.
“The company will consider value-creating, bolt-on investments where they make business and strategic sense, as well as continuing to invest in innovation platforms to deliver growth."
CEO Mike Kane though made it clear that an acquisition was very much on the radar for Boral as he told the AGM that the long term priority for the company was to expand further in Asia and the US.
“Our strengthened balance sheet provides us with the option to consider value-creating bolt-on acquisitions in the coming years but only where the business case is the right fit for Boral and our strategic road map,” he told the meeting.
And if that doesn’t happen, Mr Kane said “Capital management remains an option if growth opportunities do no present themselves”.
Capital management activity isn’t new for Boral. In March the company announced a share buyback for up to 5% of issued capital. It was completed in September.
The meeting was told by Mr Kane that the company’s earnings were matching expectations. The company lifted earnings by around 50% in the year to June, but surprised the market with a forecast of not much change for 2015-16.
That included a forecast that its construction materials and cement division, which accounts for more than half its revenue, would record a similar level of earnings this fiscal year compared to the prior year through June, before “an expected lift” in the year to mid-2017.
