Here’s Why Boral (ASX:BLD) Revised Its Profit Guidance


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Boral Limited (ASX: BLD) has announced a trading update and revised its profit guidance for FY19,

Boral is an international building products and construction materials business employing more than 25,000 employees and contractors, Boral’s operations span 850 building and construction materials operating and distribution sites globally.

Boral’s Revised Profit Guidance

For the first half of the 2019 financial year Boral expects to report net profit after tax (NPAT), before significant items, of $200 million.

The construction business also expects to announce EBITDA of approximately $485 million (click here to learn what EBITDA is).

Excluding the effect of lower earnings due to the sale of Denver Construction Materials and Texas Block, EBITDA in the first half of FY19 is now expected to be “broadly” steady compared to the first half of FY18.

EBITDA growth from Boral North America has been offset by lower earnings in Australia and a lower contribution from USG Boral.

Based on the first half result, trading for January, a detailed review of improvement opportunities to claw back first half volume shortfalls and market outlook for the remainder of the year, Boral issued revised FY19 divisional guidance.

New Boral Divisional Guidance

Boral still expects FY19 EBITDA to be higher than FY18 regarding its continuing operations.

EBITDA from Boral Australia excluding Property is projected to be similar to last year, along with Property earnings of around $30 million.

Boral North America is projected to grow earnings in US dollar terms by 15%, excluding discontinued operations.

Finally, the company expects slightly lower profits from USG Boral.

The construction company also said it’s still working on a fair market valuation for USG Boral to decide whether to exercise its call option to acquire USG’s 50% stake in the joint venture.

Is Boral A Buy?

The Boral share price is down nearly 7% in early trade in response to this news, so clearly investors aren’t as attracted to its shares as they were last week.

It might not be a good idea to buy into a business that’s currently going through a bit of a rough patch because conditions could deteriorate further. The best time to buy shares of a semi-cyclical business is when sentiment is at its worst for the industry.

Instead of Boral, it might be a better to buy shares of businesses with more reliable earnings such as the ones mentioned in the free report below.

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Jaz Harrison

Jaz Harrison

Jaz is a keen investor who loves to thoroughly poke holes in an investment idea before it has a chance of making it into her portfolio. Jaz invests for the long-term and doesn't sweat the small stuff. She strongly believes that empowering people with knowledge is the best way for them to take charge of their finances, which is exactly the approach she takes with her own money and investments.