Economy

Australian building materials giant Boral says outlook solid as investors send share price higher

Building materials boss Vik Bansal is bullish about the outlook for Australia’s construction sector once it gets through an “air pocket” this year – and the upward trajectory of revenues from Boral’s quarries, cement and concrete support his view.

Boral, the country’s biggest building materials maker, supplies Australia’s largest building and infrastructure firms with highway and home building materials and, consequently, is a bellwether for where the economy is heading.

Boral boss Vik Bansal said prices for quarried products, cement (the fine powder used to make concrete), recycling, asphalt-spray and concrete all rose between 3 and 9 per cent.Credit: Louie Douvis

“When we talk to our big customers who are involved in the infrastructure space, they all have a pipeline which looks healthy,” Bansal said, as he informed investors Boral’s revenue rose a robust 9 per cent and net profit more than doubled in the half-year to December.

The building material supplier also upgraded its underlying full-year earnings forecast to between $330 million and 350 million, a shift that pleased investors who pushed its share price up nearly 9 per cent to $5.90 on the ASX during trade on Friday.

The company’s outlook contrasts with the collapse this week of Sydney builder St Hilliers’ construction business, which plunged into administration last weekend amid concerns that rising labour costs are an ongoing threat to builders.

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While the inflation in materials that has plagued the building industry appears to be settling, costs remain high and are clearly a drag on Australia’s home-building, pipeline which is at its weakest in more than a decade.

“We saw the growth of inflation slowing down, but we don’t see deflation. Inflationary pressures from recent days have continued and inflated cost is the new reality. It is very volatile out there, look at diesel prices,” Bansal said.

Prices for Boral’s quarried products, cement (the fine powder used to make concrete), recycling, asphalt-spray and concrete all rose between 3 and 9 per cent from the prior half-year, only the price of asphalt laid on roads stayed steady.

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  • Source of information and images “brisbanetimes”

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