Boral withdraws FY2020 earnings guidance due to COVID-19 and provides update on Boral’s plasterboard transaction with Knauf

  1. 69.9k

    Boral Limited (“Boral” ASX: BLD) today provided the following update prior to the commencement of the
    pricing period for its underwritten dividend reinvestment plan (“DRP”).
    Earnings guidance and COVID-19
    Boral advised today that given the high level of uncertainty surrounding the spread, duration and impact
    of COVID-19 on the markets in which it operates, the Company is withdrawing its earnings guidance for
    Boral’s Managing Director, Mike Kane said:
    “While we have not yet seen a significant deterioration in demand for our products as a result of direct
    and indirect COVID-19 impacts, other than in our USG Boral China business, we are now starting to see
    signs of impacts in our other markets.
    “We expect market conditions will worsen as a result of temporary lockdowns and restrictions imposed to
    contain the spread of the virus. However, given the high level of uncertainty regarding the spread and
    duration of COVID-19, the negative impact on FY2020 earnings cannot be estimated at this point.
    “Boral has been taking measures to help manage the spread of the virus and to help ensure the safety
    and welfare of our employees, contractors, customers and other people coming to our sites. Our
    business continuity and scenario planning is well underway to help minimise supply chain risks and
    business interruptions during this uncertain period.”
    The Company is undertaking measures to respond to the expected demand interruptions and to
    conserve cash, including reducing all non-essential capital expenditure and discretionary spending.
    “We are working closely with our customers to respond quickly to changes in their activity, and we are
    well prepared to curtail production as required,” said Mike Kane.
    More information about Boral’s response to COVID-19 can be found at
    USG Boral transaction with Knauf
    Boral also today provided an update on progress to complete the USG Boral plasterboard transaction
    with Gebr Knauf KG (“Knauf”).
    As announced on 26 August 2019, Boral entered into an agreement with Knauf to form an expanded
    50:50 plasterboard joint venture (JV) in Asia and for Boral to return to 100% ownership of USG Boral
    Australia & New Zealand (NZ), with a call option granted to Knauf to return to 50% ownership of the
    Australia & NZ business within five years.
    (Continued over page)
    19 March 2020
    As Boral and Knauf work with regulators as part of an ongoing process to obtain the relevant approvals,
    Boral’s view now is that the ACCC is unlikely to approve the call option in relation to the Australia and NZ
    As a result, a range of potential options will be considered. Any alteration to the transaction signed in
    August 2019 remains subject to agreement between Boral and Knauf, Board approval and ultimately will
    also require the approval of regulators including the ACCC and NZCC.
    Balance sheet
    Boral remains focused on prudent balance sheet management to ensure operational flexibility including:
    reactivating and fully underwriting the DRP (~A$111.4m for the interim dividend); and, exploring noncore asset sales, with proceeds of around $82m still to come through from the Midland Brick divestment.
    Boral has considerable liquidity in its committed multi-currency syndicated loan facility. The Company
    has repaid CH150m of Swiss notes which matured in February 2020 through debt drawn from our
    syndicated bank facility. An additional US$76m of USPP, which matures in April 2020, will also be repaid
    from the syndicated debt facility. After repaying the USPP in April, the Company will have around
    US$500m of available undrawn funds in the syndicated loan facility. Boral’s next debt to mature is in
    In addition, as previously reported, Boral has a US$400m acquisition loan facility in place for the Knauf
    transaction, if required.
    Boral does not have any debt covenants that are based on earnings. The Company’s principal gearing
    covenant is gross debt /(gross debt + equity)

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    What are your thoughts here Salv?

    Divesting from bricks?.... can they see the days numbered for good ol costly clay bricks as no 1 building materiak for suburbia?

    Turned around business before...can they do it again?

    Nice break of 2.60 levels last two trading days.

    Just thinking the ol tried and true may be worth putting a few away in long term pile if theres a bit more market turmoil....sounds sicko but maybe the odd natural disaster here and there could actually help turnover......alot more likely then a new housing boom. Got to look further into iit n w/end

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  3. 69.9k

    i got out of BLD in August 2017 @ $7.02

    when they started the JV with CSR on bricks ( i hold CSR ) and then CSR took over the JV

    to me , BLD looks like it has been stumbling around trying to force growth

    divesting from bricks well that will depend on what the young home-owners will buy , i have seen some epic issues with both internal plasterboard and external cladding

    maybe those Aboriginal Gunyahs are a glimpse of the future

    i wonder how many are literally living in their car/van again

    i still hold CSR , BKW , ABC and WGN , i have faith in the industry , not much faith in BLD ( and let's face it CSR has found it's share of troubles as well especially in glass )

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    May just be a building related bounce as see whole sector strength.

    Yeah hasn't performed well. You timed it well there. That sub $2 back In March now appearing bargain like somewhat.

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    build for whom ... migration will be down , employment will be down , more will stay with the parents to save money , less likely to be more shop space needed

    .. but at $2 .. it doesn't have to do much better to be a bottom drawer hold

    i suggest more a long time than a good time stock


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