Financial results from building giant, Boral point to an Australian economy that was already slowing rapidly last year only to be further hit by bushfires, extreme weather and major project delays.
The company’s earnings before interest, tax and amortisation was down 18 per cent in the first half of the financial year on revenue up two per cent to $2.989 million.
A slowdown in the economy in Australia and South Korea and volume pressures and higher costs in North America impacted the result in the first half.
Boral CEO Mike Kane said: “In the first half in Boral Australia, seven per cent lower concrete volumes due to a 23 per cent decline in housing starts, subdued pricing, and higher costs associated with outages at Peppertree Quarry and Berrima Cement and bushfire related costs impacted revenue and EBITDA.
“This was partly offset by $30 million in cost saving.”
With building materials a leading indicator in Australia’s housing-driven domestic economy, other manufacturers are expected to be feeling similar effects of a slowdown.
The company’s troubled North American businesses where EBITDA was down 17 per cent to US$111 million came in for scrutiny in the results.
Kane said North American stone operations were disappointing, there were lower earnings from site services in the fly ash business, a lower contribution from Boral’s Meridian Brick joint venture and a one-off hit from its windows business.
Kane said: “We were disappointed however with the performance of Boral North America, largely due to shortcomings in our operational execution.”
Kane will leave Boral after delivering the full year results which are expected to be down on last year.
Kane said: “Boral Australia has started the second half with significantly lower volumes and higher costs due to bushfires and extreme weather.
“However our market position is strong and we have a comprehensive range of cost improvement and performance enhancement programmes underway.”
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