Boral chief executive Ross Batstone said conditions in the Australian housing industry have been at their worst in two decades as wet weather exacerbated a downturn in construction.
Boral reported a net profit of $176.6 million for the year to June 30, 2012 – a 5.3 per cent improvement on 2011 however one bolstered by $75 million in significant items.
Net profit from continuing operations was $101.2 million.
Mr Batstone said Australian operations – which include building products, construction materials and cement – suffered a 29 per cent decline in earnings before interest and tax (EBIT) to $263 million.
“Earnings from our Australian business in the six months to June were hit by very weak housing and non-residential building activity, combined with delays and disruption from sustained rainfall across the east coast,” Mr Batstone said.
“I have been in this industry and with this company for 21 years and I have not seen such a combination in that 21 years.”
Lower volumes of housing construction in Australia led to a $120 million decline in earnings, while wet weather delays cost a further $125 million during the year.
Price increases across most of the Australian operations partly offset the higher costs, as did increased earnings in Asia and lower losses in the United States.
Total revenue rose 6.4 per cent to $5 billion, from $4.7 billion, but was flat after excluding the impact of acquisition of the 50 per cent share of growing Asian plasterboard business, Boral Gypsum Asia, held by joint venture partner Lafarge.
Boral chief financial officer Andrew Poulter said the carbon tax would be a $21 million impost in 2012/13 but the company would seek to recoup that amount through price rises.
Morningstar analyst Peter Warnes said Boral had suffered an “annus horribilis” in 2011/12.
“It can’t get any worse,” he said.
The high fixed costs faced by Boral meant that any decline in volumes would be damaging.
However, an improvement in weather should see an improvement in the current year.
“They don’t have to do anything – if it doesn’t rain (the Australian business) has got to come up,” he said.
Boral’s shares finished three cents lower at $3.47.
