Boral has flagged growth in its full-year earnings on the back of a wave of infrastructure projects in Australia and market growth in its US operations.
The building materials supplier’s profit rose 13 per cent in the first half of the financial year to $173 million, but growth was capped by significant items, including $41 million in costs of integrating the Headwaters business it bought in the US.
Excluding significant items, profit was up 44 per cent to $213.9 million, aided by the expansion of its US operations, resilience in the Australian housing construction market, and new spending on roads, bridges and dams.
The results disappointed the market, with Boral shares dropping 15 cents, or two per cent, to $7.28.
Chief executive Mike Kane said the company had made a good start to the financial year and expects further growth in its three divisions – Boral Australia, Boral North America and the USG Boral joint venture.
“It is very clear that we are seeing synchronised global growth benefiting all three divisions,” he said.
Earnings in the largest division, Boral Australia, rose 12 per cent to $294 million in the six months to December, as infrastructure and non-residential activity increased, and even as housing construction activity tapered.
“I see a very moderate decline in the housing market, which suits us,” Mr Kane told reporters.
He said the company will also “strongly see the benefits of infrastructure spending, particularly in the fly-ash business.”
Boral supplies concrete, asphalt, cement and timber products to the construction industry, as well as fly-ash, which is used in concrete.
The newly formed North America division, which includes Boral USA as well as Headwaters, delivered earnings of $184 million, up from $41 million a year ago.
Boral increased its exposure to the US market with a $US2.6 billion buyout of building products supplier Headwaters in mid-2017, just as the housing market recovers and US President Trump’s administration looks to boost infrastructure spending.
The division is likely to see significant growth in pre-tax earnings over the full year, with most of the gains skewed to the second half of the year, Mr Kane said.
Earnings from USG Boral, which operates in Asia and the Middle East, fell one per cent to $149 million as a result of one-off costs, but its earnings are expected to grow at a mid-single digit rate for the full year.
BORAL’S HALF-YEAR PROFIT RISES
* Half year net profit up 13pct to $173m
* Revenue up 40pct to $2.9b
* Interim partially-franked dividend up 0.5 cents to 12.5 cents