Boral Limited

BLD Details

Expecting Slightly Higher Earnings in FY18 as compared to FY17: Boral Limited’s (ASX: BLD) stock tumbled 8.699% on April 24, 2018 post release of March Quarter earnings report which was below the expectation on the back of adverse climate and challenging conditions for the March quarter. According to the release, the Group has simultaneously exchanged contracts and completed the sale of its Prospect Masonry property to ISPT Pty Ltd. The sale of the property will add $56 million to the company’s EBITDA for the 2018 financial year. As a result of this, the group now expects a total EBITDA contribution from Property to be approximately $55 million to $65 million in FY18, with the sale of the Prospect site having progressed earlier than expected. Moreover, the company has updated its financial year guidance for both North America and Australia wherein Boral Australia now expects to deliver improved earnings (on both EBITDA and EBIT) growth of 10-20% for the 2018 financial year as compared to prior corresponding period. Boral North America is expected to deliver an earnings lift in the second half of around 10-25% compared to the first half result, on both an EBITDA and EBIT basis.
 

Significant increase in earnings (Source: Company Reports)
 
Moreover, the benefits of higher property earnings that include a lower effective tax rate for FY18 which is now predicted to be around 19-22%, more than offsets the impact of lower expected earnings from Boral North America on Boral’s Group NPATA (Net Profit After tax and Amortization). The Group is expected to witness high-single digit EBITDA growth and low double-digit EBIT growth in FY18, excluding property in both years for its Australia Business, while significantly higher EBITDA in FY18 reflecting Headwaters acquisition is expected for North America Business with Meridian Brick JV to report positive and improved earnings in 2H FY18. USG Boral is expected to grow at mid-single digit rate in FY18, with strong year on year growth in second half of the year. Based on synergies with JV and expecting slightly high earning for full financial year, we givea “Hold” recommendation on the stock at the current market price of $ 6.880.

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