“In Boral Australia we saw lower earnings in the first quarter of trading, with the softer housing market in Australia and delays in infrastructure projects underpinning eight per cent lower concrete volume relative to last year, and broadly flat asphalt volumes,” Mr Kane told shareholders.
The company also experienced disruptions at its Peppertree Quarry and Berrima cement plant, both in NSW, with these issues expected to adversely hit earnings to the tune of about $10 million. Boral plans to make up for these costs over the rest of the financial year.
The company’s first quarter earnings from its North America operations were down on the same period last year, but only slightly. Boral expects signs of improvement in the US housing market should flow through to its results in the second half of financial year 2020.
“While we expect a five per cent EBITDA decline in the first half, we have confidence that we can deliver a better outcome in the second half,” Mr Kane said.
“In Boral Australia, we expect several major projects to ramp up in the second half, including Queens Wharf and Westgate Tunnel projects,” he said.
The company has also increased its efforts to cut costs, with these initiatives to be “over and above” about $40 million to $50 million of savings already planned for the current financial year.
In her speech to shareholders Boral chairman Kathryn Fagg addressed the question of Mr Kane’s future and leadership succession, saying that “when the time comes for CEO succession we expect that we will be well-positioned to consider internal candidates alongside external candidates”.
In February this year Boral announced that Mr Kane had an expected two to three years left in the CEO role, as it expanded the roles of three of its key executives at the company.
Ms Fagg said the leadership changes were intended to “provide the board with well developed, experienced and capable internal candidates to be considered for CEO succession and other senior roles at the appropriate time”.