Boral dented by virus, homes weakness

Building materials supplier Boral says earnings margins have fallen, as it boosts debt facilities and reshuffles US management.

A Boral concrete plant in Sydney. Picture: AAP

Building materials supplier Boral has seen earnings margins fall amid the COVID-19 crisis, boosted its debt facilities and reshuffled management with the exit of its North American boss David Mariner.

Earnings margins for the period January through to April tracked 3-5 per cent lower than the first half of 2020 as a combination of the virus crisis and weakness in Australian residential construction eroded revenues.

Boral has yet to find a replacement for outgoing chief executive, Mike Kane, with a recruitment process continuing ahead of his planned departure after its annual results in August.

Mr Kane has faced a tough few months following a series of profit downgrades and the revelation in December of financial irregularities at its North American windows unit.

Boral said on Friday its Australian division was the worst hit, with concrete volumes down 16 per cent and revenue falling 6 per cent on the prior corresponding period due to January’s bushfires, February’s extreme weather and COVID restrictions which are yet to “fully materialise”.

North American revenues dropped 5 per cent for the four months to April with stone production volumes off 29 per cent and roofing down 14 per cent. Fly ash volumes have declined 8 per cent so far in the second half after 5 per cent growth in the first six months of the financial year.

Outgoing CEO Mike Kane. Picture: Renee Nowytarger

The USG Boral venture has seen revenue tumble 20 per cent to April with plasterboard sales down 17 per cent in Asia and off 4 per cent in Australia.

The company has avoided an equity raising - anticipated by some in the market - through a new $US200m bond, $365m of new bank loan facilities and extending $US665m of an existing $US750m debt facility until the 2024 financial year from 2022. Boral now has $1.3bn in cash and undrawn funds.

Its North American boss, David Mariner, will exit by June after a decade with the company with current North American roofing boss Darren Schulz acting in the president and CEO role. Eric Miller, the roofing marketing boss, will take on Mr Schulz’s previous role, also on an acting basis.

Boral’s operations head, Ross Harper, will switch to a new role as group president for health, sustainability, innovation and operations excellence after a period of ill health.

Boral in April canned its original plasterboard venture with Germany’s Knauf and slashed up to 20 per cent of planned spending this year as construction demand tanks due to the pandemic.