Boral boss Mike Kane has announced he is standing down after the company confirmed staff at its North American windows business had inflated earnings figures over a 20-month period.
Shares in the under-fire construction materials manufacturer fell by as much as 12.2 per cent at the open on Monday after an investigation found employees overstated pre-tax earnings by $US24.4 million ($A36.6 million) at the windows division between March 2018 and October 2019.
In a flurry of announcements to the ASX, the company also said second-half earnings across its three major units would take a hit from bushfire-related disruptions, while Mr Kane would retire after the company reported its full-year results in August.
Mr Kane has led the company for seven years, though the latter period of his reign has dogged by a series of profit downgrades, a plummeting share price and last year’s revelations of the financial irregularities in windows.
Boral said it had begun an international search for his successor.
“While the business has faced considerable challenges including lower-than-expected growth in North America, it is important to acknowledge that since (Mr Kane’s) appointment as CEO in 2012, (he) has set Boral on a path to deliver substantially improved performance for the long-term,” chairman Kathryn Fagg said in a statement.
Mr Kane apologised to shareholders on Monday for the accounting manipulation and vowed Boral would improve reporting and governance mechanisms.
“The board and management are deeply disappointed at the breach of trust that led to the accounts of the windows business being misreported to inflate profitability,” Mr Kane said.
Boral has sacked the windows segment’s vice-president of finance and the financial controller, with light building products president Joel Charlton now responsible for the division.
The company also said it would restate comparative financial information to incorporate the correction of windows earnings in underlying results, with historic pre-tax earnings to be reduced by $US22.6 million.
Meanwhile, Boral expects core earnings for FY20 to be lower across its Australian, North American and USG Boral units thanks to bushfire disruptions and a general slowdown in activity.
It flagged net profit of between $320 million and $340 million, down from $420 million last year, adjusted for the overstatement at the windows business.
Shares in the company were down 11.65 per cent to $4.55 after 30 minutes of trade on Monday, and have now fallen 45 per cent from a more than 12-year high of $8.22 in February 2018.