Boral Limited (ASX: BLD) has reported its FY21 half-year result to investors this morning, showing a sizeable increase in statutory net profit. The Boral share price is largely flat.
It’s a large construction business with operations across both Australia and North America.
Boral HY21 result
The construction business announced that its continuing operations revenue declined by 9% to $2.7 billion.
Boral Australia revenue was down 8%, reflecting lower volumes and pricing, particularly in NSW and Queensland where major project work and multi-residential activity declined. Boral North America revenue declined 3%.
Total continuing operations EBIT (EBIT explained) fell by 8% to $215 million.
Australian EBIT declined 20% to $128 million due to lower revenue and reduced property earnings. However, cost savings of $32 million from transformation programs were delivered. Excluding property earnings, Australian EBIT fell 15%.
Meanwhile North American EBIT was US$73 million, up 22%. Excluding a profit on sale of assets of around US$5 million, and prior year US$1 million one-off costs, underlying EBIT was broadly flat on lower revenue. The building products business delivered EBIT improvement in the December 2020 quarter after a softer September quarter.
Boral also said that USG Boral’s equity accounted post-tax earnings were up 22% to $28 million. On 27 October 2020, Boral announced the sale of its 50% share of USG Boral to Knauf. This transaction is expected to close in FY21. The earnings were reported as discontinued operations.
Looking at the net profit, underlying net profit of $156 million was flat compared to the last year. But statutory net profit was up 18% to $161 million.
Boral dividend
The Boral board decided not to pay a dividend as debt was higher than the target of $1.5 billion. After receiving the proceeds from the sale of USG Boral and Meridian Brick, net debt will fall below $1.5 billion, creating a surplus.
Outlook and summary thoughts
Boral said that there is growing housing demand in North America, with production ramping up in the December quarter, offset by softer market demand in Australia.
The strong conditions in North America are expected to continue, but Australia is expected to be uncertain for the rest of FY21 with weakness.
Boral is expecting the mixed performance to continue. There are other businesses in the construction sector I’d rather buy such as Brickworks Limited (ASX: BKW) which has more growth potential in my opinion.
Instead of Boral, I suggest getting a free
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