More bad weather could hamper building materials group Boral’s earnings during this financial year.
A wet winter delayed construction activity in key east coast markets as NSW experienced its wettest August in 16 years.
Chief executive Mike Kane has told shareholders more heavy rain could buffet earnings in its construction, materials and cement division during the rest of 2014/15.
“Expectations could be dampened if we are unable to realise potential property sales and some level of price increase in this very competitive market, and if we experience extended periods of adverse weather,” he said.
But, he added that Boral expected to more than double earnings in its building products division in 2014/15, which made $8 million in earnings before interest and tax in 2013/14.
Chairman Bob Every said Boral expected a resources industry slowdown, particularly in regional Queensland.
“We are expecting continued softening in roads and infrastructure activity for most of fiscal 2015 before a solid multi-year pick-up from fiscal year 2016,” he said.
Mr Kane said rising energy and labour costs remained a concern across the group.
“It remains imperative that we continually manage costs down, particularly in Australia,” he said.
But, he said: “In summary, in FY2015 we continue to expect ongoing strong results from Construction Materials & Cement, as well as improvements from both the Building Products and Boral USA divisions and improvements in the underlying USG Boral business.
“We anticipate return on funds employed to improve, despite the shift to equity accounting on Boral’s 50 per cent interest in the Gypsum joint venture.”
Boral made a net profit of $173.3 million in 2013/14, an improvement on a $212 million loss suffered during the previous financial year.