Boral cites bushfire, floods and COVID-19 disruptions in annual results

Annual financial results for major construction materials group Boral show a statutory net loss after tax of $1.139 billion.

For Boral Australia, performance reflected a 19 per cent decline in housing starts alongside bushfire and flood disruptions.

The company also recognised Australian results were impacted by an adverse geographic and product mix shift with a substantial decline in higher-margin concrete and cement volumes and a higher share of more asphalt-intensive infrastructure work.

The board will not pay a dividend for FY2020 citing the uncertain economic outlook and its earlier interim dividend payout of 9.5 cents per share, payed in April 2020, which were equivalent to 63 per cent of full year earnings.

Boral’s new CEO and Managing Director, Zlatko Todorcevski said Borals FY2020 results reflect a particularly challenging year.

“Following the lower than expected first half result from Boral North America, Boral had a difficult start to the second half of FY2020,” he said.

“Boral Australia was impacted by bushfire and flood-related events in Australia, resulting in significantly lower volumes and higher costs. This was quickly followed by COVID-19 disruptions, resulting in higher cost and product curtailments which substantially reduced earnings for all divisions.”

In response to COVID-19 he said the company took decisive action to slow production where demand was slowing, to reduce cash costs and manage inventories. Targeted plant shutdowns took place in the USA and several countries in Asia.

Todorcevski would not comment on the year ahead for Boral noting the business environment remains uncertain.

Though he did comment on early trading for FY2021 and the companies priorities.

“We have started FY2021 with lower revenues but only slightly lower earnings relative to the same time last year. Overall EBITDA margins in July recovered relative to 2HFY2020 and were broadly in line with 1HFY2020,” he said.

“We are experiencing less disruptions in most businesses, providing an opportunity for improved outcomes, however, there is potential for further disruptions and uncertainty remains.”

He noted Melbourne’s Stage Four lockdowns are having an impact with concrete volumes down 20 per cent relative to last year and it is not clear when these restrictions will lift.

The company will continue to maintain a safe and careful response to ongoing COVID-19 developments and Todorcevski said it’s current focus is on recovering an strengthening margins, delivering strong cash flows and realising benefits from divisional improvement initiatives.

Boral is undergoing a review of its portfolio of businesses to asses the market outlook, competitive position and earnings potential of each business.

“I expect to announce in late October the outcomes of the review, as well as our future operating model and target capital structure which will help to set future priorities and define the direction for longer term value creation,” Todorcevski said.

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