Boral (BLD) returned to reporting positive news in its 2013-14 results yesterday, building on the early signs of improvement which first emerged in the interim figures earlier this year.
As a result the dividend has been boosted for the final six months of the year, and for the year as a whole.
The shares rose 4.4% to $5.63, within sight of the $5.90 range reached in March and April.
They had been up more than 6% in early trading.
After peaking then in April-May above $5.90, the shares then fell to less then $5.30 on fears about the company’s involvement in the Building Royal Commission, the activities of some rogue unionists and concerns about the US returns.
But the shares started rebounding earlier this month as the results release date drew closer and a number of brokers started upgrading forecasts.
BLD 1Y – Boral beats forecasts
As it was, the company said underlying net profit after tax before significant items jumped 64% to $171 million, while underlying earnings before interest and tax and significant items, lifted 29% to $294 million.
Total reported revenue slipped 2% to $5.2 billion (thanks to the sale of the gypsum business), while revenue from continuing operations rose 7% to $4.5 billion.
The company will pay a final dividend of 8c a share.
That takes the full year dividend to 15c a share, up 36% on the previous year.
The company also said the dividend reinvestment program will remain suspended.
In yesterday’s statement, Boral CEO Mike Kane said there were a number of positives from the company’s performance in the year to June 30.
“Our focus on improving the underlying performance of Boral’s businesses through restructuring and portfolio realignment is delivering clear benefits to the business.
"Together with the ongoing housing market recovery in the USA, improved housing activity in Australia and continued growth in Boral’s markets in Asia, these benefits contributed to Boral’s stronger result.
“In Boral’s largest division – Construction Materials & Cement – despite a $20 million reduction in property earnings, the business closed the EBIT gap with improvements in underlying results.
"A significant EBIT contribution of $277 million was broadly in line with last year. Average selling prices were disappointingly flat, however, restructuring, continuous improvements and cost reduction programs delivered tangible benefits, most notably in the Cement business.
“An EBIT contribution of $8 million from Building Products was a substantial $48 million turnaround from the division’s reported losses last year.
"This strong performance improvement was achieved through portfolio rationalisation and restructuring, together with improving housing construction activity in New South Wales, Queensland and Western Australia.
“Despite a slower than expected rate of recovery in the US housing market, our Boral USA division almost halved its losses year-on-year.
"The division reported an EBIT loss of US$35 million this year versus US$66 million in the prior year; and for the first time in six years, the business reported a positive EBITDA result of US$3 million.
"Momentum is building in the US business as the market continues to claw back after six years of depressed activity levels.
“Completion of the USG Boral joint venture was a major milestone achieved during the year. The Gypsum business is in an exceptional position to leverage market growth, product penetration and new technologies, and is on track to deliver the US$50 million of joint venture synergies.
"The underlying business delivered 19% higher revenues and a 23% lift in EBIT year-on-year," Mr Kane said in yesterday’s statement.
Boral said its reported gypsum earnings of $77 million was $6 million below last year reflecting the impact of equity accounting the 50%-owned USG Boral joint venture from March 2014.
"In FY2015, we expect continued strong results from Construction Materials & Cement, improved earnings from the USA as the housing market continues to recover and further improvement from Building Products in Australia," directors said.
"While reported earnings from Gypsum will reflect a full 12-months of 50% equity accounted JV earnings, the Gypsum business is expected to deliver continued underlying earnings improvement."
