Boral Limited (ASX: BLD) has reported a strong set of results thanks to higher volumes and a restructuring program which has realigned the cost base.
The Results
Boral reports its results under four divisions and each business delivered improved operating results. The Construction Materials & Cement division, which is Boral's largest division, grew earnings before interest and tax (EBIT) by 6%. The Building Products division swung from a loss in the previous corresponding period (pcp) to a small profit. The Boral Gypsum division boosted EBIT by 30% and the Boral USA division reduced its losses as volumes began to pick up.
Sales revenue increased 4% to $2.87 billion, net profit after tax (NPAT) excluding significant items jumped 73% to $90 million and earnings per share gained 71% to 11.6 cents per share (cps).
A fully franked interim dividend of 7 cps was declared – a rise of 40% on the pcp. Shareholders will receive the payment on 24 March.
Outlook
Management stated that it expects to see continued improvement in each of the four operating divisions, however the earnings would be skewed to the first half. No specific guidance figures for the full year were provided.
Valuation
According to analyst consensus estimates provided by Morningstar, Boral is forecast to earn 19.3 cps for financial year (FY) 2014. This forecast would appear in line with management's comments regarding the first-half skew. With the shares rallying to close near a 3-year high at $5.45 on the day of the results announcement, the stock is trading on a forward price-to-earnings (PE) ratio of 28. This drops to a PE of 18.7 based on FY 2015 forecasts.
Foolish takeaway
Compared with its peers Adelaide Brighton Ltd. (ASX: ABC), Brickworks Limited (ASX: BKW) and CSR Limited (ASX: CSR), Boral's share price has significantly lagged over the past 12 months. The sound set of results and subsequent spike in share price suggests the market is awakening to this fact, however given industry momentum for further volume growth, the share price could still have further to run.
