Boral Loses $212 Million

By
Wednesday, August 21st, 2013
liked this article
Embed
Lovegrove Solicitors – 300 x 250
advertisement
boral
FavoriteLoadingsave article

As reported losses from manufacturers serving the construction industry in Australia continue to stack up, brick, tile and cement manufacturer Boral has added to the misery, reporting a massive net loss after tax for the past financial year.

As reported losses from manufacturers serving the construction industry in Australia continue to stack up, brick, tile and cement manufacturer Boral has added to the misery, reporting a massive net loss after tax for the past financial year.

In its latest announcement, the company says after achieving profits of $177 million in 2011/12, it recorded a full-year net loss after tax of $212 million in 2012/13 as asset impairments, organisational restructuring and redundancy costs led to write-downs of $316 million.

Boral says the write-downs reflect permanent structural changes within the building products manufacturing industry in Australia, whereby producers are having to cope with increased competition and weak international prices at a time of low domestic demand.

But the news was not all bad, as sales revenue ($5.29 billion) edged up six percent, underlying earnings before interest and tax (excluding the write-downs) climbed 14 percent to come in at $228 million and net profit after tax (before significant items) edged up 3 percent to $104 million.

Boral CEO and Managing Director Mike Kane says the results reflect challenging industry conditions but adds that the Group’s cost cutting and restructuring programs are being delivered as planned.

“Like the rest of the industry, Boral’s businesses have been contending with low levels of activity, unfavourable mix shifts in demand, increased competition and unrecovered costs associated with the carbon tax” Kane says. “However, in line with the turnaround strategy that I announced in late 2012, we have been relentless about reducing costs, generating cash and reducing capital expenditure, which positions Boral well as markets improve.”

Boral Ltd Earning

Following a 100 day review ordered late last year after he took the top job, Kane re-organised Boral into four key divisions: Construction Materials and Cement, Boral Gypsum, Boral USA and Building Products in Australia.

Whilst Construction Materials & Cement has been the group’s star performer – lifting earnings by 16 percent – Gypsum delivered softer results amid cyclical challenges in Asian markets and cost impacts of increased investment in China and Indonesia whilst Building Products in Australia suffered severe losses amid extremely difficult operating conditions and Boral USA also lost money.

Boral’s latest results follow announcements of a $695 million loss by miner and steel manufacturer Arrium Ltd and an $84 million loss from BlueScope – both of which also were forced into severe write-downs resulting from current industry conditions.

The company’s latest results also follow rumours it is in discussions to sell its brick and tile business to rival CSR.

Going forward, Boral does not give full year guidance but says its USA business will return to profitability in the second half whilst losses in Building Products will substantially reside and the Gypsum business should deliver better returns.

Embed
FavoriteLoadingsave article

Comments

 characters available
*Please refer to our comment policy before submitting
Discussions