Boral Posts Drop in First-half Net Profit

Submitted by Jim Thesiger on 11 February, 2010 - 07:17

Australia based global manufacturer and wholesaler of building and construction materials Boral (BLD), a company that operates in Australia, United Sates and Asia is considering to take necessary steps in an attempt to reduce its costs after posting a 9 percent fall in the first half net profit to $68 million. In addition to that, Mark Selway, the newly appointed chief of the company admitted that the figures can get even worse in the second half. According to Mr. Selway, due to a historically low market condition in the United States and mixed short-term prospects in some of the key local markets, the company might find it difficult to come up with any positive outcome during the second half of the year. He added that the company was expecting to post a $123.5 million worth of net profit for the full year.

Based on Mr. Selway’s review, the market pushed the Boral stocks up 24 percent to $5.72. Mr. Selway stated that the company successfully managed to maintain a tight rein on the costs under the ex-chief executive of the company Rod Pearse but more could be done to upgrade efficiency. The new chief executive also said that necessary steps will be taken to boost productivity through the plants. It is to be mentioned that Boral has managed to improve its cash flow by as much as 39 percent to $196 million through cutting back on capital spending.

The company reduced gearing to 44 percent from 55 percent during June 2009 and has an undrawn $850 million worth of bank debt facility. It is to be mentioned that Boral took a major hit from the residential market of the United States, a sector that is still struggling with new housing starts hanging around 570,000 a year which is 60 percent less than long-term US average of 1.5 million.