Building products maker Boral expects to repeat its second half performance in the first half of financial 2012 after a tough start to the year.
Boral’s second half net profit in financial 2011 was about $76 million, when first half earnings of $92 million are subtracted from the full year figure of $175 million.
Meanwhile, shareholders overwhelmingly approved the company’s executive pay report and increases to directors’ fees.
The company’s chief executive Mark Selway said it had been a tough start to the year with continued economic uncertainty in the United States and slowing housing construction in Australia, which was likely to continue into the first half of this financial year.
“In construction materials, we expect to benefit from major project work which should deliver improved revenue and earnings in the full year with a bias to the second half,” Mr Selway told Boral’s Annual General Meeting in Sydney on Thursday.
Shares in Boral declined eight cents, or 2.2 per cent, to close at $3.60.
But he expects property sales to be about the same as last year with the majority coming in the second half of the year.
The building products division was also hit by the continued softness in residential housing.
He added that the positive effects of the mining boom in Queensland and Western Australia were not flowing on to the building industry.
“So many of the activities there are fly-in, fly-out and they’re not necessarily translating into people building houses,” Mr Selway said.
Casting aside previous concerns about executive pay, Boral shareholders overwhelmingly approved the company’s remuneration report, with more than 97 per cent voting in favour.
They also approved a $300,000 increase in the cap on non-executive directors fees to $1.55 million.
The report included a slight increase in Mr Selway’s salary from $2.32 million in 2010 to $2.48 million in 2011, which was well received by the Australian Shareholders Association (ASA).
“We do acknowledge that there have been ongoing improvements to the structure of Boral’s remuneration practices,” ASA representative Estelle Ranard told the meeting.
However, she is concerned that short-term incentives are still delivered annually in cash, rather than partially deferred equity, and that long-term incentives are delivered within three years rather than four to five years.
Boral said its cement business experienced a solid start in Asia, despite flooding in Thailand, while volumes remain broadly flat in Australia.
The company had done well to absorb losses in the US market which remained “difficult”.
“Further permanent plant closures are currently being considered in response to the continued softness in the outlook for US housing,” Mr Selway said.
