The Boral Limited (ASX: BLD) share price gained ground at the opening bell even as the building materials supplier posted flat interim results as bad weather and rising costs dragged on its bottom line.
The BLD share price gained 0.8% to $5 when the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index rose 0.3% this morning.
Boral customers can expect more price rises as the group is looking to claw back margin from escalating costs, including fuel and energy.
Most of the bad earnings news is already priced into Boral's stock as management already flagged the results on 4 February, which triggered an 8% crash in its stock on the day of the announcement.
Earnings down but dividend up
Boral posted a 6% drop in first half underlying net profit to $200 million although sales increased by nearly 5% to $2.93 billion.
The company declared a small 0.5 cent increase in its interim dividend to 13 cents a share to appease shareholders even as underlying earnings before interest, tax, depreciation and amortisation (EBITDA), which excludes significant items and discontinued operations, dipped by $15 million over the same time last year to $485 million.
The group's Boral Australia and USG Boral lost ground although the Boral North America business managed to deliver an 18% increase in EBITDA in the half.
Mixed outlook
The results and its FY19 outlook is a "ho-hum" event as there's nothing new in it to excite investors. Management reiterated its view that Boral Australia's FY19 EBITDA will be flat as the slowdown in housing construction is offset by non-residential demand for its products.
Boral North America is tipped to increase EBITDA by 15% as announced earlier this month that is driven by synergies from Boral's acquisition of US-based Headwaters and as building activity picks up in Spring.
Earnings at Boral USG will continue to slide with EBITDA tipped to be slightly lower in FY19 than the previous year due to weakness in South Korea although demand in Australia is expected to hold up.
Foolish takeaway
I won't be surprised to see the Boral share price tread water due to the lack of an obvious near-term catalyst.
The US is the main game and it's that market that could hold the key to any upside surprise, particularly given the outlook for the Australian market.
While Boral looks cheap as its trading on a FY20 consensus price-earnings multiple of 11 times, that's dependent on management's ability to orchestrate a decent earnings recovery in that year.
We could get a better sense of that at its full year results in August, although I am hoping that management will give a pleasing update on Boral North America before the next reporting season.
In the meantime, it's a waiting game for shareholders.
