Building products and construction materials supplier Boral Limited (ASX: BLD) has experienced a 17.4% rise in its share price over the past 12 months and the results out today reinforce why the stock has enjoyed positive momentum.
- Sales revenue flat year-on-year at $4.3 billion
- Earnings before interest and tax (EBIT) up 21% to $357 million
- Profit after tax up 45% to $249 million
- Earnings per share of 31.9 cents
- Net debt up $99 million to $817 million, with gearing at 19%
- Return on funds employed improved from 7.2% to 8.2%
On a divisional basis, Construction Materials and Cement delivered $310 million in EBIT, up 9% on the prior year and assisted by $46 million in Property earnings. The Building Products division delivered $30 million in EBIT which was a $22 million improvement on the prior year. The USG Boral gypsum joint venture delivered a great result with EBIT up 38% and the division providing Boral with a post-tax profit contribution of $49 million. Finally, Boral USA returned to profitability with a $6 million EBIT contribution.
A fully franked final dividend of 9.5 cents per share (cps) is to be paid on September 28. The shares will trade ex-dividend on September 2. The final dividend brings total dividends for the year to 18 cps.
Looking forward and management was generally upbeat for each of Boral's operating divisions. The major Construction Materials and Cement division should continue to benefit from the strong Sydney market but it will need to navigate the softer Queensland market which is experiencing a slowdown from the tapering off of LNG construction projects; the Building Products division is expected to be flat year on year; the Boral gypsum JV is expected to produce an improved performance; while Boral USA should also report improvements on the back of increased US housing activity.
Buy, hold, or sell?
As with all building, construction and property related stocks, it's important that investors pay heed to where the cycle is at. The best time to buy these cyclical stocks is near the bottom of the cycle, never at the top.
