Construction giant Boral lashes building shutdown amid lockdown hit

The construction materials giant attacked confusing rules that halted building during lockdowns, and called for a national approach.

Boral lifted its annual net profit by 44 per cent to $251m. Picture: AAP

Construction materials giant Boral has lashed confusing rules that shut down the building sector during ongoing lockdowns and called for a national approach to ease a financial hit for industry players.

The country’s largest building products supplier said the shutdown at short notice had blindsided operators and forced Boral to stand down 800 staff across its NSW and South Australian operations.

“When we saw the state government in NSW took the decision to shut down construction in July, it frankly came as a complete surprise considering what we’d experienced over the previous 12 months,” Boral chief executive Zlatko Todorcevski said.

“We had operated throughout all of 2020 and frankly I think the sector has done a fantastic job and with very few cases.”

The building sector can take more than a month to get back up to full strength after lockdowns end, which had a hugely disruptive hit to the industry.

“We are looking for a national approach to the response to Covid-19, and particularly a national approach to how we react and deal with lockdowns, and impacts on construction because frankly, what we’ve seen since mid July has not been helpful,” Mr Todorcevski said.

“It‘s always easy to turn off the tap of construction but it’s a very, very slow ramp up once you reopen that gate, and we’re experiencing that now. We’ve seen it in South Australia, we’ve seen a slow ramp up in Sydney, and frankly, there’s a lot of confusion around exactly what the operating protocols should look like, and they vary state by state.”

Major business leaders have described rolling lockdowns as unsustainable and urged states to start opening up once Covid-19 vaccination levels hit 70 per cent.

NAB said lockdowns were the biggest issue for small business in Australia.

“Recent and rolling lockdowns make running any business challenging and unpredictable. This is the number one issue holding small business owners and managers back from investing in their companies,” NAB chief executive Ross McEwan said.

“Critically, we now have a plan to move from restrictions to freedoms, in line with greater levels of vaccination, as set out by National Cabinet. It gives us all a light at the end of the tunnel, and the ability for businesses to plan for a more ‘normal’ future in 2022.”

Boral CEO Zlatko Todorcevski. Picture: Jane Dempster.

A national plan would see the country reopened and an end to large-scale lockdowns once 70-80 per cent of the eligible population are vaccinated, with some freedoms being granted at 70 per cent and bigger scale changes in line should the 80 per cent target be reached.

The Boral leader backed the liftdown of lockdowns once the 70 per cent goal was achieved.

“We would love to see that as the trigger for no more lockdowns and for the loosening of restrictions on people, particularly around travel and the freedom of movement of goods and services. We recognise the focus on health — that’s always going to be a priority — but I don’t think the two are mutually exclusive.”

A new front has also been emerging in the debate over workplace vaccinations, with a push by some companies for compulsory jabs filtering through the broader economy and raising expectations that providers — including waste management company Cleanaway — who come into contact with those companies may fall into line with the same strict policy.

Viva Energy, which supplies fuel to more than 1250 petrol stations through the Shell Coles Express service stations, said while its preference was to encourage its workforce to vaccinate voluntarily — aiming for vaccination levels of 90 per cent or better — the company believed some parts of its business might be forced by either regulators or customers to mandate vaccinations.

“I anticipate that there might be parts of our business where it may be mandatory because of either regulations that require us to, or through customer requirements — so at airports, for example, we might be required to do that,” Viva chief executive Scott Wyatt said.

“We’ve had great support from our employees right through Covid-19 in so many ways, and I’m absolutely confident that they’ll step up and do the right thing around vaccinations as well.”

Boral warned ongoing lockdowns have damaged momentum in its business, with a $50m hit expected in the first quarter of 2022 due to the economic slowdown, while no dividend will be paid to shareholders. Extended lockdowns due to the Delta variant of Covid-19 have led to uncertain conditions for the business.

Temporary construction closures in greater Sydney and South Australia in July have already cut earnings before interest and tax by $16m due in July to lost volumes and higher costs, leading to a $50m reduction over a three-month period.

Boral also revealed plans to sell its US flyash business following a strategic review and said it was in the final stages of a process, a move which follows the sale of its US building products business for $US2.15bn ($2.9bn) to Houston-based manufacturer Westlake Chemical Corporation.

That move will strengthen a broader strategy to focus on its core Australian market after a mixed foray into North America under previous boss Mike Kane, including the giant acquisition of Headwaters.

The construction materials giant lifted its annual net profit by 44 per cent to $251m.

While no dividend would be paid to shareholders, the sale of Boral’s US building products business and other assets could see surplus capital returned to investors depending on franking credits and the prevailing share price.

Kerry Stokes’s Seven Group now controls Boral with a 70 per cent stake.

Boral shares fell 5.55 per cent on Tuesday to $6.47.

Additional reporting: Joyce Moullakis