Boral flags hit to first-half earnings from softer housing market

A weaker Australian housing market is the key factor behind a projected 5 per cent fall in Boral's first-half earnings to about $461 million.

Boral chief executive Mike Kane confirmed the expected slide in first-half EBITDA (earnings before interest, tax, depreciation and amortisation) at the company's annual meeting in Sydney.

A weaker housing market is affecting Boral's earnings.Credit: Joe Armao

But he reaffirmed the construction material group's full-year profit forecast released in August. Boral expects full-year net profit (before significant items) to be about 5 to 15 per cent lower than 2019, due to lower earnings and higher depreciation charges.

"In Boral Australia we saw lower earnings in the first quarter of trading, with the softer housing market in Australia and delays in infrastructure projects underpinning 8 per cent lower concrete volume relative to last year, and broadly flat asphalt volumes," Mr Kane said.

Boral also experienced disruptions at its Peppertree Quarry and Berrima cement plant with these issues expected to deliver a hit to earnings of about $10 million. Boral plans to make up for these costs over the rest of the financial year.

First-quarter earnings from North American operations were slightly down on the same period last year, but the company expects an improved US housing market in the second half.

"While we expect a 5 per cent EBITDA decline in the first half, we have confidence that we can deliver a better outcome in the second half," Mr Kane said.

Mr Kane told The Age and The Sydney Morning Herald after the meeting that some positive signs were emerging in the local housing market.

"We're seeing signs of green shoots in housing in Australia, that we may have seen the bottom. That's kind of what we're seeing. We don't know, there could be another leg down on this," he said.

"Some of our customers are telling us that demand is stabilising or coming back slightly," he said.

Boral has also increased its efforts to cut costs, with these initiatives to be "over and above" the $40 million to $50 million of savings already planned for the current financial year.

Boral chairman Kathryn Fagg addressed the question of Mr Kane's future and leadership succession, saying that "when the time comes for CEO succession we expect that we will be well-positioned to consider internal candidates alongside external candidates".

In a marathon meeting lasting about three hours, shareholders asked a range of questions including whether the company was doing enough to cut its emissions and whether a big investment in a US business in 2016 was paying off.

One shareholder said Boral's stock price was 40 per cent higher about a year ago and said people who bought in at the beginning of last year would have reason to be "extremely disappointed".

The company recorded an 18.7 per cent protest vote against its remuneration report and Karen Moses was re-elected as a director but with a 31.6 per cent vote against her.

Shares in Boral closed down 3.7 per cent at $4.90.