Boral Limited (ASX:BLD) announced today the completion of a six month review, which will result in major strategic and organisational changes designed to capitalise on the Group’s strengths and provide a strong platform for growth.
The Chief Executive, Mr Mark Selway, said the review had clearly identified the core investment priorities for Boral as cement and construction materials in Australia, plasterboard in Australia and Asia, and bricks, roof tiles and masonry both in Australia and in the United States.
Mr Selway said that an increased focus on core markets and geographies combined with improvement in productivity and efficiencies should lead to growth in margins, reduced working capital and improved customer service.
“The review has been very comprehensive and has crystallised the markets and geographies where the Group has the potential to achieve long term growth and deliver sector best returns,” he said. “The improved focus has allowed the Group to simplify our internal structures and several key organisational changes have been made to help facilitate the execution of our plans.”
Mr Selway said Boral would recognise a charge of approximately $289 million to reflect the impairment of assets identified during the review as under-performing, as well as older, high-cost facilities in the USA, including four obsolete brick plants.
He said the Boral Board had approved a capital raising of approximately $490 million to support future capital investments and growth, including the strategic acquisition of the remaining 50% of Boral’s US concrete roof tile business, MonierLifetile, for US$75 million and the proposed investment of circa $280 million into key Australian assets which will enhance Boral’s market positions in NSW and Victoria. The capital raising would also strengthen Boral’s balance sheet.
“By strengthening our core operations and balance sheet, the Group will have the financial flexibility and competitive advantage to capitalise on opportunities across each of our divisions and geographies, and in the process, improve shareholder returns.”
“The initiatives we have announced today are fundamental steps in our strategy to improve the performance of the Group - and to free up capital in readiness for long-term market growth,” he said.
“This is the first stage in the Group’s strategy aimed at reinforcing our foundations and building a platform for growth and enhancing value for our shareholders.”