Boral slashes costs in tough climate
At the same time, its construction materials business is expected to put in a static performance, amid wariness over the impact of the slowdown in spending in the resource sector.
Boral refrained from giving firm guidance at Thursday's annual meeting. Rather, it highlighted the push to slash costs as it seeks to move earnings onto a sustainable basis. "It will take several years before we achieve the transformation we are planning," chief executive Mike Kane said.
In particular, the group is seeking to lift the return on funds employed to average 15 per cent "through the cycle". This is significantly higher than the present level of 4.7 per cent.
Since being appointed CEO a year ago, Mr Kane has moved to cut costs, lift cash generation, reduce borrowings and close or sell unwanted assets.
The second stage of the cost-cutting regime includes reducing the outlay on contractors, moving to cheaper office accommodation and changes to procurement programs, and is expected to reduce costs by $25 million this financial year, and a further $20 million next financial year. The recent closure of the Berrima colliery south of Sydney will save another $7 million, excluding transition costs.
It is also seeking to raise the prices of some products, although a recent rise in cement prices was unsuccessful, shareholders were told.
The largest asset deal so far was to forge a joint venture with US Gypsum across Asia and the Pacific, by pooling their interests. This will raise an initial $US500 million while also reducing earnings by an estimated $15 million.
Frequently Asked Questions about this Article…
Boral is experiencing sluggish demand and challenges with its local building materials and US operations, which are not expected to become profitable until later in the financial year.
Boral is experiencing sluggish demand in both its local building materials and US operations, with the US not expected to become profitable until late in the financial year. Additionally, there is concern over the impact of reduced spending in the resource sector on its construction materials business.
Boral is focusing on slashing costs, lifting cash generation, reducing borrowings, and closing or selling unwanted assets to move earnings onto a sustainable basis.
Boral is focusing on slashing costs to move earnings onto a sustainable basis. This includes reducing contractor expenses, moving to cheaper office spaces, and changing procurement programs, aiming to cut costs by $25 million this financial year and an additional $20 million next year.
Boral's cost-cutting measures include reducing contractor expenses, moving to cheaper office accommodations, and changing procurement programs, aiming to save $25 million this financial year and an additional $20 million next year.
Boral aims to lift its return on funds employed to an average of 15% through the cycle, which is significantly higher than the current level of 4.7%.
Boral has attempted to raise the prices of some products, but a recent increase in cement prices was unsuccessful.
Since becoming CEO, Mike Kane has focused on cutting costs, increasing cash generation, reducing borrowings, and closing or selling unwanted assets to improve Boral's financial health.
Boral aims to lift the return on funds employed to an average of 15% through the cycle, significantly higher than the current level of 4.7%.
Boral's cost-cutting measures are expected to reduce costs by $25 million this financial year and an additional $20 million next year. The closure of the Berrima colliery is also expected to save $7 million, excluding transition costs.
Boral has entered into a joint venture with US Gypsum across Asia and the Pacific, pooling their interests to raise an initial $US500 million while reducing earnings by an estimated $15 million.
Boral has attempted to raise the prices of some products, but a recent increase in cement prices was unsuccessful, as reported to shareholders.
The closure of the Berrima colliery is expected to save Boral $7 million, excluding transition costs.
Boral has entered into a joint venture with US Gypsum across Asia and the Pacific, pooling their interests. This deal is expected to raise an initial $US500 million while reducing earnings by an estimated $15 million.
Boral's long-term transformation goals include achieving a sustainable earnings model and significantly improving the return on funds employed, although this transformation is expected to take several years.
Boral's US operations are not expected to move into profitability until late in the financial year, indicating ongoing challenges in that market.
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