Boral earnings continue to fall

BUILDING products maker Boral says its earnings continue to be weaker than expected because of a slump in housing construction.

Earnings from Boral's construction materials and cement division in the three months to March 31 were $19 million below the company's forecasts, Boral said on Monday.

The news sent Boral shares tumbling when the market opened, losing 18 cents, or 3.9 per cent, to be worth $4.49 at 1032 AEDT.

The fall in earnings was caused by weaker building activity in Victoria, delays to projects in Victoria and South Australia, and poor weather in southeast Queensland, Boral said.

The company expects some of that shortfall in earnings to be offset by higher revenue from work associated with liquified natural gas projects in Queensland and Western Australia.

Boral's cost-cutting measures, which includes 700 job cuts, were also expected provide a rise in overall earnings over the financial year, it said.

The company said it expects to make a net profit of between $90 million and $105 million in the year to June 30, excluding costs related to its restructure.

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Boral merges businesses to slash costs

BORAL has already slashed $100 million in costs because of the housing slump, and has now announced it will merge its construction materials and cement divisions.

Australia's depressed housing market has been blamed for the cost cuts, sale of assets and job cuts.

The building materials group recently axed 700 jobs but a spokeswoman for Boral said the only worker to lose their job out of the merger was current, long-serving construction materials manager Murray Read, who has been made redundant.

Joseph Goss, a senior executive in the cement division of Lafarge North America, has been appointed to manage the newly merged division.

A week after announcing the 700 new job cuts in January, Boral upgraded its underlying first-half profit forecast to about $52 million from $35 million, aided by trading improvements especially in US housing.

However after restructuring costs, the company suffered a first half net loss of $25.3 million and said it expects conditions to remain challenging in the building products market.

The result was dragged down by $77 million worth of significant items, including impairment charges relating to the suspension of clinker production at Waurn Ponds in Victoria and first half restructuring and redundancy costs.

A cyclical recovery was expected in construction, supporting Boral's repairing of its balance sheet including net debt of $1.4 billion, Commonwealth Bank analysts said in a research note on Monday.

It saw asset sales of its Windows, US Construction Materials businesses and continued property sales releasing about $180 million.

"We are comfortable maintaining a positive view on Boral at this stage," the analysts said.

The company's shares had risen 10 cents, or 2.0 per cent, to $5.03 on Monday, and are up 15 per cent this year.

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