Boral slashes jobs, then boosts profit
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.
Frequently Asked Questions about this Article…
Boral flagged a stronger-than-expected December half net profit of $52 million. That was higher than its earlier guidance at the November 1 annual meeting, when it said the December half net profit was expected to be little changed from the $35 million earned in the prior second half (2011-12).
Investors reacted warily because the trading update didn’t include provisions or write-offs for the half. The shares traded lower for much of the day but recovered by the close, ending flat at $4.88 after rallying sharply on the back of last week’s heavy round of cuts.
Boral carried out a heavy round of job cuts and asset rationalisation. The company said the cuts will leave about one in three white‑collar employees out of a job as part of its restructuring program.
Yes. Boral flagged restructuring and redundancy costs of $60 million. The $52 million December half profit was reported before taking those $60 million costs into account; the costs will be brought to account as a significant item.
Analysts are expecting a roughly $100 million write‑down against the value of Boral’s Waurn Ponds clinker plant at Geelong, which the company has decided to idle.
Boral said it will break out earnings of its full gypsum division for the first time in its next results. The gypsum division had revenue of $655.9 million in the year to June, roughly on par with the building materials arm’s $659.9 million.
Boral attributed the stronger profit rebound to favourable weather conditions and the early benefits of its restructuring and rationalisation. The company also noted the rebound comes ahead of an anticipated strong recovery in US construction sector demand.
Investors should look for the inclusion of the $60 million restructuring and redundancy costs as a significant item, any confirmed write‑downs (such as the expected ~$100 million Waurn Ponds write‑down), and the newly broken‑out gypsum division earnings for more clarity on underlying profitability.
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