The Boral Limited (ASX: BLD) share price is soaring today following the release of its half year report.
Here are the key takeaways from the Boral half year report:
- Revenue fell 4.6% to $2.1 billion
- Net profit rose 12.3% to $153 million (or 9.1% before significant items)
- An interim dividend of 12 cents per share fully franked was declared
- Boral USA's 50% stake contributed $13 million in operating profit
Boral said that despite robust revenue from Eastern Australia and the USA, it was pulled lower due to accounting standards surrounding its formation of the Meridian Brick joint venture, coupled with other projects.
"We have been positioning Boral for improved performance and growth, and it's delivering benefits, which we can see in the half year results," Boral CEO, Mike Kane, said. "With Australia's construction activity transitioning from resources to multi-residential and infrastructure, we are seeing benefits from the initial ramp-up of Australia's multi-year pipeline of major roads and infrastructure work, and we are capitalising on the continued strength of east coast residential markets."
"We expect growing benefits from major infrastructure projects in the coming years," Kane added.
The company's USG Boral joint venture and Boral USA boosted the overall profit performance.
"From Boral USA we achieved an A$13 million year-on-year increase in earnings, underpinned by modest but continuing market growth," Mr Kane said. "The formation of the US Bricks JV – Meridian Brick – during the period, as well as the announced acquisition of Headwaters Inc, means that we are well on our way to transforming Boral to deliver better returns and value-creating growth."
Buy, hold or sell Boral
Looking ahead, Boral expects operating profit to grow with the Boral Australia business kicking goals. In the US, a strengthening economy also bodes well for a short-term injection to profits. However, commitments to some investments may stunt profit growth.
In my opinion, investors should be aware that Boral shares do move in-line with the broader economy. However, with diversification and a steady dividend yield, I think the company's shares should be on long-term investors' watchlist.
