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Boral profits drop 44% in December half

The building materials major recorded a profit of $75 million for the second half of 2008, down from the $132 million profit recorded for the second half of 2007.The company’s December half sales revenue of $2.6 billion was in line with last year’s revenue reflecting steady Australian revenues of $2.15 billion, an 18% decline in US revenues to $313 million, and a 26% increase in revenues from Asian operations to $123 million.Boral chief executive Rod Pearse said he expected the second half of the 2009 financial year to be particularly challenging.“We are expecting a profit after tax of around $120 million for FY2009 assuming 600,000 to 650,000 US housing starts, around 135,000 Australian housing starts and an AUD-USD exchange rate of $0.65 in the June half,” he said. “Market conditions in the USA are extraordinarily difficult with housing starts in the half year 65 per cent below peak levels in 2006,” Pearse said. He said the housing market in Australia is also well down, with housing approvals in the half year some 35% below estimated underlying demand, and in Asia, the spreading global financial crisis is increasingly impacting activity. “Fortunately infrastructure activity in Australia remains solid, which is sustaining strong construction materials volumes.” Pearse said the company was mitigating the impacts of the market downturns by lifting prices to recover increased costs, continuing to temporarily close plants and reduce production, and rigorously taking costs out of the business.

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