The Boral Limited (ASX: BLD) share price has had a disappointing start to the week following the release of a trading update.
At the time of writing the building supplies company's shares are down over 8% to $4.54.
What was in the update?
This morning Boral announced that in the first half of FY 2019 it expects to report earnings before interest, tax, depreciation and amortisation (EBITDA) of approximately $485 million and net profit after tax of approximately $200 million, subject to finalisation of the auditors' review.
Excluding the impact of lower earnings due to the sale of Denver Construction Materials in July 2018 and Texas Block in November 2018, EBITDA for the first half of FY 2019 will be broadly in line with the first half of FY 2018.
Although the Boral North America business is expected to deliver EBITDA growth, this will be offset by lower earnings in Australia and a lower contribution from USG Boral.
What about the full year?
Management has downgraded its FY 2019 guidance to reflect the conclusion of its first half, a detailed review of improvement opportunities to claw back first half volume shortfalls, and the current market outlook.
According to the release, Boral's FY 2019 EBITDA is expected to be higher than FY 2018 for continuing operations.
This will be the result of flat EBITDA from Boral Australia excluding Property, full year EBITDA growth in the region of 15% from Boral North America, and slightly lower profits from USG Boral.
Management had previously expected high single digit EBITDA growth from Boral Australia excluding Property, 20% EBITDA growth from Boral North America, and profit growth of around 10% for USG Boral.
Should you buy the dip?
This decline means that Boral's shares are now changing hands at approximately 11x trailing earnings. While it isn't a share that I would buy, I do see a lot of value in them at this level for patient investors and feel they could be a good alternative to Adelaide Brighton Ltd (ASX: ABC), CSR Limited (ASX: CSR), and James Hardie Industries plc (ASX: JHX).
