Combination of factors results in material reduction in fourth quarter sales volumes in Australia
BORAL say Australian sales volumes in the fourth quarter have been materially affected by adverse weather in June, further delays in major resource sector and road projects, weaker property sales, an earlier than planned maintenance shutdown at Waurn Ponds Cement Works and continued weakness in the residential construction sector.
Performance in the company’s US and Asian operations is said to be broadly in line with second-half forecast.
At the half year, guidance was given for 2012 net profit after tax (NPAT) before significant items to be within the range of A$150 million to A$175 million.
A trading update was issued on 20 April which stated that the third-quarter full-year 2012 NPAT was A$22 million below expectations, effectively reducing the range to A$128 million to A$153 million.
Now, however, Boral say they expect full-year 2012 NPAT before significant items to be within the range of A$100 million to A$110 million.
Commenting on the latest trading update, issued on 27 June, Boral CEO Ross Batstone said: ‘A number of recent events have come together to weaken Boral’s trading performance in the fourth quarter, adding to the impact of ongoing weakness in the Australian new housing construction market.’
According to recently released figures, March quarterly housing starts in Australia were 25% down on the previous year.
Nevertheless, Mr Batstone believes that Boral’s underlying strategy remains sound, and says the company will continue to focus on the reduction in borrowings through the divestment of non-core operations and tight management of capital expenditure and working capital.
Capital expenditure for the full year 2012 is now projected to be at the lower end of the A$400–450 million guidance given at the half year.
‘Based on our current strategy and plans, we do not expect there will be any need for additional equity raising in the short to medium term,’ he said. ‘The company continues to operate comfortably within its banking covenants, and we will continue to focus on our core strategies, the integration of the acquisitions made during the first half of the year and the divestment of non-core businesses.’