Building products company Boral Ltd today said it expected 2003/04 earnings to be about 20 per cent higher than the previous year. The company, which is currently seeking to takeover cement group Adelaide Brighton Ltd, today reported a net profit of A$185.8 million for the half year ended December 31 2003, up 29 per cent. Chief executive Rod Pearse said the company anticipated Australian dwelling approvals would experience "interest rate related softening" in the second half of the year compared with the first half. He said subject to any unforeseen events, Boral’s earnings should be approximately 20 per cent higher for the full year to June 2004, compared with the $283 million profit reported the previous year.
Mr Pearse said Boral’s improved half year result was driven by strong market conditions and improved underlying performance. "During the half year we experienced stronger levels of activity in the Australian non-dwelling and infrastructure markets as well as further growth in the US housing market and in Asia," he said. "In addition, effective pricing initiatives in Australia, cost reduction and improvement programs, and continuing contributions from growth activities are having a very positive impact on Boral’s underlying performance."
He said since Boral’s demerger in 2000 operating margins had lifted approximately 60 per cent. Australian earnings before interest and tax (EBIT) improved 30 per cent to $232 million driven by factors including growth in non-dwelling and infrastructure activity and effective pricing initiatives. The company’s US operations delivered EBIT of $60m, up 11 per cent, supported by a robust housing market and solid half year contribution from the Franklin Brick acquisition. Boral’s Asian operations contributed a half year profit of $16.7 million, up 25 per cent as a result of improved volumes.
