30/08/2017 - 12:14

Boral hit by WA slowdown

30/08/2017 - 12:14

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Building products manufacturer Boral has been dented by the continued weak performance of its Western Australian operations, reporting lower underlying earnings and a $20 million asset impairment for its WA bricks business.

Boral hit by WA slowdown

Building products manufacturer Boral has been dented by the continued weak performance of its Western Australian operations, reporting lower underlying earnings and a $20 million asset impairment for its WA bricks business.

The ASX-listed company said the WA bricks business, which trades as Midland Brick, suffered a 26 per cent fall in volume and a 5 per cent fall in prices during the year to June 2017.

Restructuring of the operation resulted in the loss of 52 jobs.

That followed a similar number of job cuts in the 2016 financial year.

Boral said the WA bricks business achieved break-even earnings before interest and tax (Ebit) in the year to June 2017, down from a $9 million Ebit in the previous year.

Details of the $20.4 million asset impairment were not disclosed.

Boral is one of three big brick manufacturers in WA, along with ASX-listed Brickworks and privately owned BGC, which entered the market in 2009 through its Brikmakers arm. 

Like Boral, Brickworks has undertaken a major restructuring of its WA operations in recent years to cope with the slowdown in activity and acute pricing pressure.

Other parts of the Boral business were also adversely affected by trading conditions in WA last year.

Boral said its concrete business achieved positive contributions from all states except WA, with prices rising in every market except WA.

The asphalt business was affected by project delays in WA, while the quarries business faced pricing pressure in the state.

Apart from WA, Boral reported strong results, with underlying profit after tax increasing by 28 per cent to $343 million.

After significant items, net profit after tax increased 16 per cent to $297 million.

Boral’s core Australian operations lifted Ebit by 11 per cent to $349 million, with strong east coast residential activity and higher infrastructure spending driving the improvement.

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