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Boral (ASX:BLD) share price soars on 144% profit growth in HY24 result

The Boral Ltd (ASX: BLD) share price has jumped 10% after the company reported strong growth in its FY24 first-half result.

Boral is one of the largest construction companies in Australia.

HY24 result

Here are some of the highlights from the six months to December 2023.

  • Net revenue rose 9.4% to $1.84 billion
  • Underlying EBITDA rose 51.8% to $313.6 million, and the EBITDA margin improved 4.7% to 17%
  • Underlying EBIT rose 110.9% to $201 million, and the EBIT margin improved 5.2% to 10.9%
  • Underlying net profit after tax (NPAT) increased 144% to $138.6 million
  • Statutory NPAT of $122 million
  • Operating cashflow jumped 197% to $348.6 million

Boral explained its revenue had been driven by “strong price realisation”, while volumes were virtually the same as last year.

Its profit margins improved thanks to the revenue growth and “rigorous cost management” which helped “offset input cost inflation.” This may be a key help for the Boral share price.

It achieved free cashflow of $259.6 million thanks to price increases, the productivity improvements and a focus on working capital management.

The business finished December with $84.5 million, down from $338.2 million at June 2023.

Was there a Boral dividend?

The board of directors decided not to pay a dividend for the first half of FY24.

The reason given was because of Boral’s low franking credit balance.

Outlook for the Boral share price

Boral is expecting its earnings to return to the trend where profit is weighted towards the first half – FY23 was a recent exception to this trend. The typical seasonality will resume in FY24.

The company also said volume trends are expected to remain unchanged in the second half of FY24. It said it will “maintain a strong discipline on price and cost”.

Assuming there isn’t a significant shift in market demand or the price environment, Boral is expecting to deliver underlying EBIT in the range of between $330 million to $350 million in FY24.

Some of its focuses include progress towards decarbonisation targets, increasing participation in the circular economy with its recycling business, improving its marketing and customer service, extending the life of its “prized” upstream assets, deploying auto allocations in Sydney, and building logistics and mobile assets systems and capability.

Boral is doing well for shareholders, but the Boral share price has risen strongly so I’m not sure now is a good time to invest – this is the sort of industry that can go through cycles. I’d rather invest at a weaker point than this. If I were already a shareholder, I’d be very happy.

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