What’s pushing the Boral share price lower?
The Boral share price is on the slide today after the company reported a net profit after tax of $156 million, which is on par with its first-half performance in FY20. The company advised that this number excludes significant items.
Earnings before interest, tax, depreciation and amortisation (EBITDA) for the period ending 30 December 2020 was $486 million, down 1% on the prior corresponding period (PCP). The EBITDA figure also excludes significant items.
Boral Australia experienced an 8% fall in revenue to approximately $1.6 billion for the first-half FY21. This compares to the previous year’s $1.7 billion in revenue. The company associates the revenue loss with lower volumes and pricing, particularly caused by a decline in major project work across New South Wales and Queensland.
Boral North America also took a 9% revenue hit on its continuing operations. First-half FY21 revenue was around $1.1 billion compared to $1.2 billion for 1H FY20.
Free cash flow took a massive leap from $35 million in the first-half FY20 to $333 million in 1H FY21.
And while Boral last year paid investors a 13.5 cent dividend for the period, the directors decided that no interim dividend would be paid for the 1H FY21.
This decision was based on the company’s current net debt (including leases) which weighed in at $1.9 billion. The board determined not to pay the interim dividend since this number was higher than its $1.5 billion target.
In today’s update, Boral noted uncertain market conditions in both Australia and the US. However, it expects some disruptions (such as coronavirus) to impact the remainder of FY21 considerably less.
Boral advised that transformation initiatives being executed by the business delivered $65 million of gross benefits during the first-half FY21.
The company expects the full year FY21 transformation benefits to be around $170 million to $190 million before inflation and hopes this gain will offset the revenue losses caused by business slowing down.
Transformation initiatives implemented to date include the sale of 50% interest in USG Boral for US$1.01 billion and Meridian Brick for US$250 million. Both transactions are scheduled for completion in FY21.
Boral has appointed a new CEO and CFO, and set in place revised growth strategies. The transformation initiative has also boosted sales and marketing activities.
Boral share price and company snapshot
Boral Australia is an integrated construction materials and building products manufacturer and supplier. Its products include cement, aggregates, concrete, asphalt, bricks, roofing, masonry products and timber. Boral also maintains a network of concrete, asphalt and manufacturing sites across Australia.
Based on the current Boral share price, the company has a market capitalisation of $6.6 billion and has 1.2 billion shares outstanding.
Over the past six months, the Boral share price has gained nearly 40%.