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Boral slashes jobs, then boosts profit

24 Jan 2013 THE AGE - BRIAN ROBINS



HARD on the heels of a heavy round of job cuts and asset rationalisation, building materials heavyweight Boral has disclosed stronger than expected December quarter earnings, flagging a $52 million net profit for the December half.

Investors reacted warily to the news, however, since the trading update did not include any indication of provisions or write-offs for the half.

This left the shares lower for much of the day, but they recovered lost ground by the close, ending flat at $4.88. They rallied sharply on the back of last week's heavy round of cuts, which will leave one in three white collar employees out of a job.

At the time of the November 1 annual shareholder meeting, Boral said it expected the December half net profit to be little changed from the $35 million earned in the second half of the 2011-12 financial year.

But favourable weather conditions "together with early benefits from Boral's restructuring and rationalisation" have underpinned a strong profit rebound, it said.

The rebound here comes ahead of an anticipated strong recovery in US construction sector demand as well.

The flagged December half profit is before taking into account costs associated with the restructuring and redundancies which were flagged last week, costing $60 million and which will be brought to account as a significant item.

Analysts are also expecting a $100 million write-down against the value of the group's Waurn Ponds clinker plant at Geelong, which is to be idled.

Boral also said on Wednesday it is to break out earnings of its full gypsum division for the first time in its next results. The division had revenue of $655.9 million in the year to June, on a par with the building materials arm's revenue of $659.9 million. Boral has previously given the Asian gypsum earnings but not Australia's, which has earned about one-third of Asian gypsum division earnings.