Wagner’s profit dives as Boral dispute drags on

Wagners’ profit has been halved due to a sluggish construction market and the effect of a dispute with its top customer Boral.

Wagners CEO Cameron Coleman.

Building products group Wagners saw its annual profit dive by half due to a sluggish southeast Queensland construction market and the effect of an ongoing dispute with its biggest cement customer Boral.

The company controlled by Toowoomba’s Wagner brothers said net profit after tax for 2019 fell by 49 per cent to $12.8 million from $24.8m with the final dividend axed.

Wagners said large infrastructure projects had been delayed in the state while its dispute with Boral had led to lower cement volumes, hitting both revenue and earnings before interest and tax. Earnings from its core construction, materials and services unit fell by 33 per cent to $30.1m from $44.8m.

Wagners shares have plunged from an all-time high of $4.29 in October last year on the back of a softening outlook for building construction in the company’s main markets in Queensland, delays in major infrastructure announcements, and the dispute with Boral.

Wagners floated at $2.71 a share in ­December 2017 and closed yesterday up 5 per cent to $1.54.

Wagners in April said it would take a $10m hit to its earnings after calling in the lawyers on its biggest cement customer and launching action in the Queensland Supreme Court over a pricing dispute.

It said Boral was trying to force down its contract prices because it had been ­offered cheaper prices by an unnamed competitor — believed to be Cement Australia, a 50-50 joint venture between Swiss giant ­Holcim and HeidelbergCement’s Hanson.

The company suspended deliveries to Boral, which takes about 40 per cent of Wagners cement, while it disputed the bona fides of the rival offer through dispute resolution procedures in its contract.

The company said in March that the decision to suspend supply to Boral, for up to six months, would cost it $20m in lost revenue.