Building products group Boral’s shares have hit a three year high after its half year profit jumped by 73%.
Shares in building materials company Boral have shot to a three year high after a 73 per cent jump in its half year underlying profit.
Improved housing and road construction markets, cost cutting measures and dry weather conditions helped the company lift its underlying net profit to $90 million in the six months to December 31.
However, the company also warned of a slowdown in activity and earnings in the second half of the financial year.
Boral recorded a net loss of $26 million for the half year, but that includes $117 million in one-off accounting charges related to its Gypsum plasterboard joint venture, due to be completed on February 28, that it says will be offset by gains in the second half.
Boral shares gained 45 cents, or nine per cent, to $5.45.
All four of its divisions lifted earnings, although the American sector still recorded a loss.
Chief executive Mike Kane highlighted a $23 million turnaround in the Australian building products division and a six per cent lift in its largest division, building materials and cement.
“(That) was driven by strong project activity, very dry weather conditions in NSW and Queensland, and the benefit of restructuring, and overhead cost reduction initiatives,” he told reporters.
“Despite expected underlying performance improvements, there will be a skew of earnings to the first half compared to the second half due to higher major project volumes, dry weather conditions in the first half and the impact of the (Gypsum) joint venture.”
The company achieved $60 million in cost savings – helped by cutting 1,000 jobs – and plans to use much of a $500 million payment from Gypsum JV partner USG to reduce its $1.39 billion net debt.