Thursday 4th Jun, 2020

East coast infrastructure boom puts Boral on front foot

Photo: Boral

Net profit rose almost 50% for building materials supplier Boral in FY17, thanks to higher earnings from its Australian business and significant growth in its US arm.

Boral boss Mike Kane said demand remains strong in Australia thanks to the booming infrastructure sector on the east coast.

“Boral Australia delivered a 15% lift in EBITDA to $634 million and attractive EBIT returns on funds employed of 17.5%, well above Boral’s cost of capital,” Kane said.

“We have continued to optimise our networks and grow volumes in Australian east coast markets, where demand is very strong, and we continue to focus on full cost recovery through price and strengthening margins through improvement programs.”

Kane said he expects good conditions to continue for Boral Australia, thanks to ongoing strong activity in infrastructure.

“Volumes from commercial, infrastructure and major projects activity, and margin improvements are expected to more than offset the impacts of a moderating residential construction sector,” he said.

Outside of Australia, Boral benefited in FY18 from a full-year contribution from the Headwaters fly ash and building products business, which Boral added to its North America business in November 2016.

Boral North America achieved a 9% proforma growth in EBITDA to US$284 million in FY18.

“We are confident in the success of our integration of the Headwaters acquisition during the year,” Kane said.

Boral reported synergies of US$39 million achieved in the Headwaters businesses in FY18, up from the initial US$30-US$35 million target.

“We have increased our initial year 4 synergy target by 15% to US$115 million as a result,” Kane said. “We have also strengthened our plans to grow our fly ash business by increasing available supply of fly ash over the coming years.”