ASX 200

Boral forecasts continued strong construction industry growth

Go to Colin Hay author's page
By Colin Hay - 
Boral ASX BLD 2023 financial result revenue EBIT forecast cement building materials construction industry

Australia’s largest building and construction materials supplier Boral (ASX: BLD) is predicting further strong growth over the current financial year after obtaining significantly improved results for the fiscal year ended 30 June 2023.

Chief executive officer, Vik Bansal, said that as long as there are no major shifts in market demand or the price environment, the company expects to deliver an underlying earnings before interest and taxes (EBIT) of between $270 million and $300 million for FY24.

That is a significant forecast as the company recorded a 106% improvement with its 2023 FY EBIT of $231.5 million.

Significant turnaround in profits

In a significant turnaround, the company also delivered a 304.2% jump in underlying net profit after tax (NPAT) of $142.7 million.

Its adjusted earnings per share (EPS) of 12.9 cents was also up 303.1% on the previous year.

Mr Bansal said the company had overcome a challenging cost environment which was offset in part by price and improved cost discipline with cost base adjustments.

He added that the full year results show a clear improvement across the entire business and pointed to the opportunities that remain ahead.

“We have seen volume growth across all our products, coupled with a disciplined approach to price, cost, and cash. Safety of our people is our highest priority and zero harm remains our goal. Significant work remains to deliver best-in-class performance we strive for, and 47% improvement in our recorded injury rates equates to 83 fewer people injured compared to the previous year.”

“Along with the improvement in safety of our people, we remain focussed on improving our customer service. Our PEMAF pillars – People, Environment, Markets, Assets, and Financials – continue to underpin the simplification and standardisation initiatives that are now well underway at Boral.

“Our business cadence and focus have shifted to be aligned with the new operating model. This is providing clarity in role and accountability for our people, with clear operational and financial targets established for each pillar.”

NPAT results down

While the majority of the results were significantly higher, the company recorded a decline in its NPAT to $148.1 million.

However, the prior year included $977.6 million of post-tax income from discontinued operations primarily relating to the profit recognised on the sale of Boral’s North American Building Products business.

Compared to FY22, Net Revenue of $3,460.6 million was 17.1% higher, driven by increased volumes across all products and pricing strength in all regions and products.

Boral’s earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 37.6% to $454.4 million.

The company’s operating cash flow rose by 66% to $358.7 million, while its free cash flow sat at $154.5 million.

Cement remains strong

Boral’s cement business remained strong during FY23, led by the commissioning of a new cement facility at Geelong and a fly ash facility at Tarong in Queensland.

The company also successfully upgraded its concrete business with plants upgraded in West Gosford NSW and West Burleigh in Queensland.

Elsewhere, the company’s quarry business secured over 100 million tonnes of reserves and commenced the upgrade of the Townsville quarry plant.

Working to be cleaner and greener

Mr Bansal said Boral made good progress on decarbonisation and broader sustainability initiatives in FY23, including signing a renewable energy solar power purchase agreement which is set to come into operation in FY25.

He said Boral is working on a number of areas aimed at improving its environmental stewardship including investing in resources to improve water efficiency, reducing waste generated in its operations and diverting more of that waste from landfill, and strengthening its biodiversity management.