Boral upgrades its 2023-24 earnings forecast by 10 per cent

One of Australia’s largest construction supplies businesses Boral has reported a 10 per cent upgrade in it s2023-24 earnings forecast.

Boral’s shares have surged following a 10 per cent upgrade to the construction supplies giant’s earnings forecast after a better than expected result over July-October.

Boral said it expected its 2023-24 underlying earnings before interest and tax (EBIT) to be in the range of $300m-$330m, well over its previous guidance on August 10 of $270m-$300m, ­assuming there are no large changes to demand or prices.

The company said the improved financial result for July-October was achieved through price traction and cost management across each of its businesses.

Boral chief executive Vic Bansal said there was also improving confidence that the gains achieved in the first four months of 2023-34 would be held for the balance of the fiscal year.

“We are pleased to upgrade our FY24 guidance, with year-to-date performance reflecting greater discipline in the pricing and cost from our operating model,” Mr Bansal said.

“Price realisation remains extremely important in the current inflationary environment.

“Volumes year to date have been relatively steady and at this stage we expect this to continue through the remainder of FY24.”

From the midpoint of the new guidance is a 36 per cent increase on 2022-23 EBIT of $231.5m, which was more than double that recorded in the previous year.

Boral’s shares rallied 5.1 per cent to close at $4.93, giving the company a market value of $5.4bn.

Since the start of the year, Boral’s shares have increased more than 70 per cent after a tough 2021-22.

In May 2021, billionaire Kerry Stokes’s Seven Group Holdings launched a takeover bid and emerged with a stake of more than 70 per cent in Boral after a lengthy battle.

Boral had been a perennial underperformer before Mr Stokes bought in, installed new management, divested about $4bn of ­assets – including those of a failed foray into fly ash in the US – and shifted the company’s focus back to Australia.

In October, Boral revised its 2024-25 carbon emissions targets to a 12-14 per cent reduction in absolute Scope 1 and 2 carbon emissions against 2019, to reflect what is achievable given regulatory and project delivery delays.

Boral said it and its board could not issue a forward-looking statement that it knew to be untrue or unachievable.

Boral will report its first-half results on February 9.

Last month Moody’s Investors Service affirmed Boral’s Baa2 ­issuer rating as well as its (P)Baa2 senior unsecured medium-term note program rating.

In a research note, it said Boral’s concentrated ownership by an entity that Moody’s viewed as being of weaker credit quality than Boral was credit negative.

“Mitigating this risk is Boral’s publicly articulated financial framework and it has used proceeds from business divestments over the past few years to reduce debt,” it said.

“Boral has an excellent liquidity profile and includes Moody’s expectations for operating cash flow of around $350m-$400m over the next 12 months and cash balances of $658m as of June 30, 2023.”