Nov 2 2006
Boral Ltd has announced that it is expecting that its profit after tax for the year ending 30 June 2007 will be around 15% below last year. It is also expecting first half year profit after tax to be around 15% below the corresponding period last year.
This is a revision to the outlook statement previously made by the company that after tax profits in FY2007 would be comparable to the A$362 million profit reported for FY2006. CEO and Managing Director, Rod Pearse, said that Boral’s changed outlook for FY2007 has been driven by macro-economic factors. “Boral is currently experiencing significant macro-economic headwinds in our key USA and NSW markets which together account for about 60% of our earnings. Market conditions are now expected to be significantly weaker than previously anticipated during FY2007.
“Whilst we were expecting a slowdown in the USA housing market, which accounts for about 30% of Boral’s earnings, we have been surprised by how sudden and sharp the slowdown has been in the first quarter of the year. Whilst the rate of slowdown varies between regions, dwelling starts in the USA in the September quarter were down by 27%.
"In Boral’s brick states, September quarter dwelling starts fell by 20% and in Boral’s roof tile states dwelling starts fell by some 38% compared to the September quarter last year. That is substantially below our expectations and conditions are not expected to improve in the short term.
“We are also experiencing significantly weaker conditions than expected in New South Wales, which accounts for a further 30% of Boral’s earnings. Our bricks, roofing and masonry businesses in NSW experienced sales volumes in the September quarter which were around 20-25% below last year. Also, NSW pre-mix concrete volumes, as measured by ABS, are estimated to be down by 12% in the September quarter compared to the corresponding period last year."