Lending Association

Boral upgrades yearly earnings guidance

The Kerry Stokes-controlled building products giant, Boral (ASX:BLD), has upgraded its full-year earnings guidance after revealing a strong performance for the six months to December.

Boral said that the “strong revenue and earnings growth with margin expansion” for the December half-year had seen its underlying EBIT guidance increase to $330 to $350 million from $300 to $330 million previously.

This increase follows a 9.4% jump in revenue to $1.840 billion for the half-year, a 52% jump in underlying EBITDA to $313.6 million, a 110% leap in underlying EBIT to $201 million, and an underlying EBIT margin of 10.9%, up 520 points from December 2022.

Statutory net profit after tax reached $122.0 million, with an underlying net after-tax profit of $138.6 million – up 144%.

Boral attributed the significant increase in revenue to “strong price realization and volumes that were flat to slightly up on the previous corresponding period in 2022.”

Boral Chief Executive Officer, Vik Bansal, expressed satisfaction, stating, “I am pleased to report first-half results that demonstrate the benefits of our operating model and our business improvement strategy.”

“Our volumes were flat to slightly up on the previous corresponding period, with an increase in quarry and recycling materials. We achieved good price realization across all product lines, supporting growth in net revenue. We also continued to reduce costs and instill operational efficiencies to offset input cost inflation.”

“The combined improvements in price and cost efficiencies, together with a mix in volumes that were flat to slightly higher, enabled an EBIT margin of 10.9%, almost double the previous corresponding period.”

“Boral’s earnings have historically been weighted towards the first half. While FY23 was a recent exception to this trend, with the introduction of a new operating model and strategy in 1H23, we expect to return to a typical first-half weighting in FY24.”

Boral reported a strong balance sheet position as of December 31, with net debt reduced to $84.5 million from $338.2 million at 30 June 2023, and gearing (net debt to equity) decreased to 3.8% from 14.3%.

The Board decided not to pay a dividend for the December half-year due to Boral’s low franking credit balance.

The company, 70% owned by Kerry Stokes’ Seven Group Holdings, would likely avoid paying a dividend to avoid raising its tax bill and those of minority shareholders.

Boral is the first company in the Stokes empire to report, with Beach Energy (30% owned by Seven Group) reporting on Monday, Seven West Media (40% owned by Seven Group) on Tuesday, and Seven Group (57% owned by the Stokes family) on Wednesday.