Boral tanks as Seven Group takes profits by selling 11.1 million shares

Boral shares tanked on Wednesday after Kerry Stokes’ Seven Group Holdings cashed in for some profits from the building group.

Boral and Seven Group’s Ryan Stokes. Picture: Nikki Short

Boral shares tanked on Wednesday after Kerry Stokes’ Seven Group Holdings took some profits off the table in the building group, selling down about 1 per cent of the company at $4.90.

The sale, conducted after the close of the ASX on Tuesday, spooked the market into an 8 per cent selldown on Wednesday, as other shareholders took flight on the back of the sale of the Seven Group stake.

Boral rushed out an early announcement to the market on Wednesday saying the were no material changes to its business coming that needed to be disclosed – but its shares were still sold down on heavy volumes during the day.

It is understood Seven Group has offered assurances it does not intend to sell down any further, after selling down 11.1 million shares of the 800.8 million the company owned in Boral.

Boral shares have been on a run recently, lifting over $5 a share in the lead up to the company’s annual results this week – to a high of $5.15 at one point – meaning the company was trading at more than 20 times its expected earnings for the current financial year which is a substantial premium to peers such as AdBri, CSR and Fletcher Group.

The sale delivered a handy short-term profit for Seven Group, which last crept up the Boral register in October 2022 – buying at $2.90.

The Boral price is well short of the $7.40 Seven Group was paying two years ago in its takeover tilt for the building group.

Boral delivered its annual results on August 10, declaring its best set of underlying profit figures in five years after booking a $142.7m underlying net profit for the year – up 304 per cent on the previous period.

Boral chief executive Vik Bansal.

The company is rebuilding its business under the leadership of Vik Bansal, after the massive restructuring of the company under predecessor Zlatko Todorcevski – which included substantial cost cutting and a massive wave of asset sales as the company retreated from its ill-fated ventures in the US market.

Seven Group has made no secret of its belief Boral’s simplified structure will eventually drive the company’s share price back to the takeover-offer levels.

This is despite the fact Boral likely faces a tougher environment over the next few years as inflation feeds through the general economy and the massive infrastructure spending programs from governments across Australia start to slow.

Boral is targeting double-digit EBIT margin growth in the medium term and improved the rate this year to 6.7 per cent from 3.8 per cent last year, the company said in its annual results.

When delivering the results Mr Bansal told shareholders volume growth is likely to be flat in the current year but prices, which started rising in October last year, will continue to rise this year in line with increased costs, albeit at a slower rate – helping the company hit its growth targets.

Boral shares closed down 40c to $4.63 on Wednesday.