Boral deliver strong first-half results

Strong underlying revenue and EBIT growth; Standardization and simplification initiatives under way

BORAL Ltd have reported their financial results for the six months ended 31 December 2022 (1H FY23), delivering strong underlying revenue, earnings, and profit growth.

The company’s underlying net profit after tax (NPAT) of A$56.8 million was up 53% compared with the prior corresponding period. On a statutory basis, NPAT was A$89.5 million for 1H FY23, down 91% when compared with 1H FY22, which included A$1,002.4 million of income from discontinued operations primarily relating to the profit recognized on the sale of the North American Building Products business.

Revenue of A$1,681.1 million was 12% higher in H1 FY2023, driven by volume and price, and EBITDA was up 7% to A$206.5 million, brought about by price and cost discipline which Boral say helped offset the sharp increase in costs felt across the business.

Underlying EBIT of A$95.3 million was 15% higher (23% higher on an excluding property basis), whilst EBIT margin increased to 5.7%, a 20 basis-point improvement, and operating cash flow was up 37% to A$117.4 million.

Commenting on his first set of financial and operational results for Boral, chief executive officer Vik Bansal (pictured) said: ‘I am pleased to report a half-on-half improved performance on key metrics amidst a challenging inflationary and operating environment.

‘While our financial results are pleasing considering a difficult inflationary environment, I know Boral are capable of much more. We are reporting underlying NPAT of A$56.8 million, up 53% and adjusted EPS of 5.1 cents per share, which is a 50% improvement.

‘It is promising to see our pricing actions gain traction, which, along with volume growth and cost discipline, drove EBIT, excluding property, 23% higher to A$95.4 million in comparison with the prior period. This resulted in a 50-basis point EBIT, excluding property, margin expansion to 5.7%.

‘We will need to remain highly disciplined and focused in getting price realization from the market across the country while maintaining a disciplined approach to cost management. Price erosion is not an option for Boral.’

Mr Bansal continued: ‘At our AGM in November, I introduced PEMAF – People, Environment and Sustainability, Markets, Assets, and Finance. This underpins the simplification and standardization initiatives that are now well under way at Boral.

‘During the first half of the year, we have been quick to move towards a new, decentralized but standardized operating model, aimed at better leveraging our network, extensive downstream footprint, and vertically integrated upstream infrastructure. We now have in place a flatter and broader organizational structure that positions the business closer to the front line and the customer.

‘Under this model, the regional concrete and quarry business units will have responsibility for day-to-day execution, ensuring proximity to the customer while driving greater alignment and accountability. Importantly though, they will manage their assets, the operation, the work, and our people in a standardized way.

‘Further, we have expanded our circular materials management offering, which is already achieving positive results and we are exploring further opportunities to grow our recycling business.’

Looking ahead, Boral say they expect 2H FY23 EBIT to be broadly in line with 1H FY23.