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Boral earnings hit by fuel & coal price rises & lower sales due to exceptional rainfall

Boral, Australia's biggest construction materials and building products supplier, says its earnings have been hit by sharp fuel and coal price rises and lower sales volumes due to recent exceptional rainfall in New South Wales and Queensland.
By Guy Woodford March 23, 2022 Read time: 2 mins
Boral earnings have been hit by rising fuel and coal prices coupled with lower sales due to exceptional rainfall in NSW & Queensland

The company expects underlying earnings before interest and tax (EBIT) for its continuing operations (excluding property) in FY2022 to be between AUS$145 million and $155 million, assuming no further extraordinary rain events.

Boral's CEO & managing director, Zlatko Todorcevski, said: "The impact on sales volumes of the extreme rainfall across New South Wales and Queensland in late February and early March have adversely impacted Boral's earnings by $23 million. The exceptional weather conditions have prevented us from delivering products to our customers in many regions and caused significant production disruptions to our operations. "In addition, unusually extreme and rapid increases in the price of coal and diesel have recently occurred. This cost escalation is not expected to be recovered by our January and February product price increases, with the future cost impact based on current forward prices."

The company's exposure to coal prices is unhedged for H2 FY2022, while hedging is in place for most of its expected diesel usage to April 2022, with no hedging after that. Elevated fuel prices are also exacerbating supply chain constraints, which, as disclosed in its H1 FY2022 results, are expected to continue to impact H2 FY2022.

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