Building products group Boral has finally bitten the bullet and will write down the value of its underperforming US operations.
The company will book a non-cash impairment of $1.3 billion in its financial results for the year to June 30 which will be released on 28 August.
$1.2 billion of this impairment relates to written off goodwill, intangible assets and Boral’s investment in the Meridian Brick joint venture, all in the US.
The company has been nursing its North American business for some time, with the Covid-19 pandemic the last nail in the coffin of hopes that value can be restored to the businesses.
However Boral did acknowledge ‘recent operating performance of our businesses’ as a factor in the write downs in a statement to investors.
The company said it had taken into account forecasts of future house starts which are down from 1.5 to 1.3 million and reduced fly ash volumes as coal fired power stations close their doors.
A further $123 million impairment will be booked on Boral’s Australian businesses.
This reflects a decline in housing construction especially in NSW, a slower than expected rate of infrastructure construction, declines in construction in Western Australia and the Northern territory and the impact of bushfires on its timber businesses.
Boral expects to report earnings before interest tax depreciation and amortisation (EBITDA) of $820-$825 million.
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