The company’s reported sales revenue of AUS$2.716bn (US$2.097bn) was down 9% on H1FY (financial year) 2020, and sales revenue from continuing operations of $2,703bn (US$2.087bn) was a 9% dip on the previous half-year.
Boral’s earnings before interest and tax (EBIT) of AUS$254mn in the six months to 31 December 2020 was up 1% compared to H1 2020. EBIT from continuing operations stood at $215mn, down 8% on 1 January to 30 June 2020, reflecting lower EBIT from Boral Australia.
Net debt (including leases) reduced to AUS$1.9bn from AUS$2.6bn in June 2020 reflecting strong operating cash flow, disciplined capital allocation, a favourable exchange rate movement and AUS$108mn of proceeds from the sale of assets. With net debt remaining higher than Boral’s target of AUS$1.5bn, the company’s board has determined not to pay an interim dividend.
Boral’s CEO & managing director Zlatko Todorcevski said: “While market conditions across the sector remain uncertain, we have made strong early progress to reset our portfolio of businesses, in line with our commitment to shareholders to transform Boral into a more agile, resilient and profitable company. Much work remains to be done, but we are well on our way.
“Our half-year results were impacted, as we expected, by a decline in multi-residential and non-residential construction activity in Australia, particularly in New South Wales, and the completion of a number of major projects, ahead of materials demand from new projects coming through. We are in a good position to supply demand when activity in Australia picks up.
“In North America, housing demand strengthened throughout the half. We have taken actions to increase production in our building products businesses and to mitigate COVID-related absenteeism and labour shortages, and we are well placed to support market demand in the second half.”
Todorcevski said Boral’s safety performance was broadly steady with a recordable injury frequency rate of 7.7. He stressed that a key company priority remains to manage the impacts of the COVID-19 virus and keep its people, customers, and communities safe.
While market conditions have been challenging, Boral’s CEO and MD highlighted the substantial progress made to strengthen Boral’s business. “As we announced late last year, our comprehensive portfolio review confirmed we have outstanding assets and positions, and importantly that there is a lot of potential to improve the performance of our businesses.
“Following the review, we announced the sale of Boral’s 50% interest in USG Boral to Knauf for US$1.015 billion, as well as the sale of Meridian Brick for US$250 million (US$125m Boral share).
“In the first half of this year, we delivered $32 million of Transformation benefits net of inflation, with a run rate of around $83 million against our $300 million Transformation target. These benefits came from cost reduction initiatives in Boral Australia, with further opportunities identified and being matured. Boral North America also has a suite of improvement opportunities and delivered benefits to offset inflation in the first half.
“In October 2020, we said we would explore third-party interest in our Building Products businesses in North America to determine if there are opportunities to create greater value beyond our business improvement initiatives. We have now appointed advisors to support this value assessment process.”
As a follow on from Boral’s portfolio review, Todorcevski said the company had conducted a more detailed and focused study of the US fly ash market. Boral’s strategy is to strengthen the Fly Ash business for the long term, including maturing plans to develop and grow fly ash supply from targeted alternative sources.
He concluded: “Overall, our priorities are clear: the building of a stronger, better performing, more customer-focused Boral, with a portfolio of businesses that are delivering strong returns for our shareholders, in an organisation of proud and engaged people.”
