Building materials maker Boral expects Australia’s property market to ease this financial year but predicts strong growth on the back of a wave of major infrastructure projects.
The company boosted profit in the year to June 30 by 16 per cent to $296.9 million, helped by higher building activity in Australia and improved earnings from its US operations.
Excluding significant items, its full-year profit rose 27.9 per cent to $343 million, while revenue was up 1.8 per cent per cent to $4.4 billion.
Chief executive Mike Kane said the results were underpinned by growth in each of Boral’s divisions: Australia, North America and the USG Boral joint venture.
Boral Australia in the 2018 financial year is expected to deliver higher earnings before interest and tax (EBIT) than in FY17, excluding property, which is tipped to be in the lower end of the historic range of $8 million to $46 million.
Value of work done in its roads, highways, subdivisions and bridges segment increased by 14 per cent year-on-year in FY17 and is tipped to grow by a further 15 per cent this financial year.
Boral Construction Materials and Cement managing director Joe Goss said several major projects were moving from the engineering stage into construction.
“We have been talking about … this big tsunami coming on involving projects where we are finally getting into the phase where the engineering work is done and we’re actually putting a lot of materials on the ground,” he said.
Boral is involved in projects such as the Warrego Highway stage 2 and Kingsford Smith Drive in Queensland, and Sydney Metro, while it is tendering for a range of work including Melbourne Metro.
It expects housing starts in Australia to fall around 12 per cent to about 190,000 in FY18, while housing starts in the US are forecast to lift eight per cent to 1.29 million.
Mr Kane said Boral anticipated greater savings through synergies following its $US2.6 billion acquisition of North American building products and fly ash company Headwaters than its earlier forecast $US100 ($A125 million) a year within four years of the deal’s closing.
“I am more optimistic today than I was when we announced this deal,” he said.
Boral shares dropped 20 cents, or 2.9 per cent, to a three month low of $6.63.
BORAL’S FULL-YEAR PROFIT RISES:
* Net profit up 16pct to $296.9m
* Revenue up 1.8pct to $4.4b
* Final 50-per cent franked dividend of 12 cents a share, up 0.5 cents