Boral suspends earnings guidance, to rework German Knauf deal

Construction materials supplier Boral has suspended earnings guidance and will reconsider its Knauf plasterboard venture.

Boral shares fell 11pc on Thursday with its shares now down 56pc in the last month. Picture: AAP

Construction materials supplier Boral has suspended earnings guidance, will reconsider the structure of its Knauf plasterboard venture and is awaiting an Australian class action to be filed over its US accounting scandal.

The Sydney-based company joined a growing number of Australian corporates saying it expects economic conditions to worsen in markets beyond China as lockdowns are put in place to deal with the virus.

Production could be cut to preserve cash if required.

“We are working closely with our customers to respond quickly to changes in their activity, and we are well prepared to curtail production as required,” said Boral chief executive Mike Kane, who is due to step down as the company’s boss in August.

Boral tumbled 11 per cent to $2.11 amid a broader market sell-off with its shares now declining 56 per cent in the last month given it a market capitalisation of just under $2.5bn.

A long awaited $US441m deal unveiled in August with German giant Knauf may also have to be reworked following talks with Australia’s competition regulator.

Boral had proposed paying $US200m for the remaining 50 per cent stake of USG Boral in Australia and $US241m for a half share of the Asian venture.

Under the deal, Knauf had a call option to buy the half stake back within five years for the Australian USG stake.

However, Boral says that call option for Knauf in Australia and NZ is unlikely to be approved by the Australian Competition & Consumer Commission following talks it held with regulators.

“As a result, a range of potential options will be considered. Any alteration to the transaction signed in August 2019 remains subject to agreement between Boral and Knauf, Board approval and ultimately will also require the approval of regulators including the ACCC and NZCC,” Boral said.

A class action by shareholders is also being launched following the revelation in December of financial irregularities at its North American windows unit.

The CJMcG superannuation fund has filed a suit through law firm Quinn Emanuel in the Federal Court over Boral’s North American windows business, based on investors who acquired Boral shares and American depositary receipts.

Boral said in February that earnings were overstated in its US windows business by $US24.4m from March 2018 to October 2019.