construction site
Boral’s sales results went down in part due to a decline in non-residential activity. Image: Jan Huber, Unsplash
  • NPAT before significant items is $156 million - similar to same time last year
  • Cash flow is up 65 per cent
  • Net debt still too high - no interim dividend will be paid

Boral (ASX: BLD) reported net profit after tax (NPAT) before significant items of $156 million – similar to the same period last year.

Reported sales revenue were down 9 per cent compared to the first-half of RY20 to $2.72 billion with earnings before interest and tax (EBIT) of $254 million which is up 1 per cent compared to the previous period, however,  EBIT from continuing operations of $215 million is down 8 per cent.

Operating cash flow is much stronger at $391 million – this figure is 65 per cent higher than the first half of FY20 which had $237 million as the operating cash flow.

Cash generation was strong due to inventory reductions and debtor level improving.

Net debt – including leases – fell from $2.6 billion in June 2020 to $1.9 billion as a result of the strong operating cash flow, disciplined capital allocation and favourable exchange movements.

Additionally, $108 million of cash was injected into the company thanks to the sale of assets.

Net debt, however, remains higher than the target of $1.5 billion – therefore Boral’s Board intends to not pay an interim dividend.

Boral additionally announced that they have an EBIT transformation target of $300 million to achieve returns above the cost of capital. In the first half of FY21 results, $32 million of transformation benefits were delivered.

Zlatko Todorcevski, Boral’s CEO and Managing Director, remarked that despite the market uncertainty the company has so far made strong early progress to reset their portfolio.

“Much work remains to be done but we are well on our way,” said Mr Todorcevski.

“Our half-year results were impacted, as we expected, by a decline in multi-residential and nonresidential construction activity in Australia, particularly in NSW, and the completion of a number of major projects, ahead of materials demand from new projects coming through

“We are in a good position to supply demand when activity in Australia picks up.”

Mr Todorcevski also referred to a recordable injury frequency rate of 7.7 which was steady. He insists safety is a priority for Boral.

“We are focused on delivering another step change improvement in safety and environmental outcomes. A key priority remains managing the impacts of the COVID-19 virus and keeping our people, our customers and our communities safe.”

Following the results yesterday, Boral shares fell from an open of $5.37 to a low of $4.97 before recovering at close at $5.01.

The volume was highly volatile with 8,041,384 shares traded yesterday – every other day this month has seen daily volumes between 2 and 5.7 million.

Today, the shares opened at $5.03 reaching a high of $5.20 before closing at $5.06 – a one per cent increase.

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