Boral to dig deeper in new cost cutting
Boral is finalising another heavy round of restructuring, which will include further job cuts, as it moves to outsource some functions, along with overhauling a range of other costs such as property leases.
Earlier this year, Boral cut an estimated 800 jobs as part of a $90 million cost-cutting program to help revive the group's fortunes.
Along with the new round of cost-cutting, Boral is pursuing industry-wide rationalisation initiatives in the building materials area - specifically bricks and timber - which need approval from the Australian Competition and Consumer Commission since they involve mergers or asset sales to competitors.
Boral managing director Mike Kane said the cost cuts would be finalised by the annual general meeting on October 31. The round of cost reductions would not be the size of the January cuts, but would be "significant".
"This is long term and more meaningful than head count, with decisions around outsourcing, leasing arrangements" and the like, Mr Kane said.
The focus is expected to be at the operating level, on supply contracts and procurement, now that the easier cuts have been made.
Parts of the Australian building products industry were in structural decline, he said, which was forcing the main players to cut costs hard to stay in business.
Boral on Wednesday disclosed continued losses at key parts of its business, forcing a $328 million write-down in asset values. Despite the heavy cost-cutting, tough domestic markets restricted the group to a net profit of $104.4 million in the year to June 30, little changed on the profit of $101.2 million a year earlier. Revenue rose 6 per cent to $5.3 billion.
Firm earnings in domestic construction materials and cement were offset by weakness in building products and a flat performance by its gypsum unit. The US arm, which had losses contract, is expected to return to profitability at the pretax level in the fourth quarter, and continue to build profits as the US recovery and rebound in housing starts deepens.
Even with the flat profit, the company has lifted the final dividend to 6¢ a share, from 3.5¢ last time, giving a steady 11¢ annual payout.
The $328 million write-down of asset values below the line pushed the group into the red, with a net loss of $212 million for the year.
The result before one-offs just topped the average analyst forecast of $99.3 million, and was at the top end of the company's forecast range of $90 million to $105 million.