Building products maker Boral has lifted its full year profit by just under 50 per cent to $257 million.
Boral chief executive Mike Kane says the Australian housing construction market is at its peak and is set to soften, and the roads and infrastructure market is weak except for NSW.
“We view the housing market in Australia as at an all-time peak,” Mr Kane said.
“Realistically, there’s only one direction for that housing market to go, so we expect overall a slight retraction.”
The NSW housing market would likely remain strong, but there was weakness in Queensland, Victoria and Western Australia.
Boral also expects a continued sub-performance in the construction of roads, highways and infrastructure in 2016, except in NSW.
NSW was aggressively pursuing roads, highways and infrastructure investment, but Queensland and Victoria were slow to get out of the starting blocks.
“We do not foresee any significant movement in either one of those states to have any significant impact in this financial year,” Mr Kane said.
Nonetheless, Mr Kane said Boral still believed there would be long-term growth in roads, highways and infrastructure projects in Australia, but it would mostly translate into earnings for Boral in the years after 2016.
In fiscal 2016, earnings from Boral’s biggest division, construction materials and cement – excluding property sales – are expected to be in line with 2015.
“We will need the strong Sydney construction market and further benefits from restructuring and improvement initiatives to offset a depressed Queensland construction market, subdued roads and highway activity, and further tapering off of LNG major project volume,” Mr Kane said.
Mr Kane said Boral’s building products division should maintain similar earnings in 2016 to 2015.
Boral reported a 48.3 per cent lift in full year profit to $257 million, from $173.3 million a year earlier.
Boral said the result reflected efforts to realign the group’s portfolio, reduce costs and strengthen responsiveness to changes in market conditions.
Boral’s construction materials and cement, building products and USA divisions all generated higher earnings.
Mr Kane said he was especially pleased that the Boral USA business had made a profit for the first time in his five and a half years at Boral, reflecting the ongoing recovery in the US housing market and benefits from business improvement initiatives.
- Annual net profit of $257.0 million, up 48.3 pct
- Revenue of $4.4 billion, down 15.2 pct
- Final dividend of 9.5 cents, up 1.5 cents