Profile: Boral (BLD) is a global construction material and building products company. It has three divisions: Boral Australia, with core businesses in cement and construction materials; Boral USG, which focuses on plasterboard and related products; and Boral North America, with businesses spanning fly ash, roofing, stone and other building products.

History: Bitumen and Oil Refineries (Australia) Limited was incorporated on 4 March 1946, with the current trading name of Boral adopted in 1963. In 2000, the Energy division was demerged into Origin Energy. In 2014, Boral and USG Corporation formed a plasterboard and ceilings joint venture, USG Boral Building Products, and in 2016 Boral formed a North American bricks joint venture with Forterra Brick and sold its share of the Boral CSR Bricks joint venture. BLD also made a US$2.6bn acquisition of Headwaters Inc in 2016.

Earnings composition: Boral Australia generated A$593m, or 56%, of BLD’s FY19 EBITDA (earnings before interest, tax, depreciation and amortisation). Boral North America reported A$415m (39%), while USG Boral reported $57m (5%).

Most recent result – FY19: BLD group EBITDA declined 2% on the prior corresponding period (pcp) to A$1,037m. A strong result in Boral North America was offset by earnings declines in other segments. NPAT was down 7% on the pcp to A$440m. A 13.5 cent dividend was declared, which was down slightly from 2H18; however, the full year dividend of 26.5 cents was in line with FY18.

Company outlook: BLD announced a transaction where: 1) it buys the remaining 50% of USG Boral AU and NZ for c.US$200m from Knauf; 2) Knauf will be allowed to buy back the 50% stake sold to BLD within a five-year period; and 3) the USG Boral Asia JV will be expanded – with the JV acquiring Knauf’s Asian plasterboard assets for US$533m. BLD also announced it has entered an agreement to sell its Midland Brick business for c.$86m. The transactions are expected to be complete by the end of CY19 “or soon after”, subject to conditions and approvals. BLD expects FY20 NPAT to be c.5-15% lower on the pcp, driven by earnings pressures in Australia and USG Boral. It expects c.US$20m of Headwaters synergies in FY20.

Important dates: Ex-dividend date was 30 August 2019. Payment date is 1 October 2019. AGM is scheduled for 6 November 2019.

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