Boral increases Asian investment<\/p>\n
SYDNEY (Reuter): Australian building materials and energy
\ngroup Boral Ltd yesterday pledged to invest a further A$100
\nmillion (US$79 million) in Asia in 1996\/97 as part of its
\ncontinuing expansion into the region.<\/p>\n
Boral managing director Tony Berg said the company would
\ncontinue to expand its foothold in China's plasterboard market,
\nwhile also focussing on further development in its Indonesian and
\nMalaysian concrete and plasterboard operations.<\/p>\n
"We're targeting about A$100 million of investment into Asia
\nthis year. That's gross," Berg told reporters.<\/p>\n
He was commenting after the company reported a dismal 30
\npercent drop in net profit for 1995\/96 (July-June) to A$205.69
\nmillion and cut its final dividend to 7.5 cents a share, fully
\nfranked, from 10.5 cents.<\/p>\n
Berg said the company's bottom line remained a casualty of the
\nAustralian housing market slump, which slashed margins in Boral's
\nbuilding products and construction materials businesses to 6.8
\npercent from 12.8 percent in 1994\/95.<\/p>\n
"Margins should be substantially higher. Our objective would
\nbe to improve it above the 12.8 (percent level)," he said.<\/p>\n
"There are some favorable signs in some areas that prices are
\nstarting to move up."<\/p>\n
Berg said he expected first half 1996\/97 profit to be lower
\nthan a year earlier but the second half should show the benefits
\nof the long-awaited upturn in the Australian housing market.<\/p>\n
"The timing of the upturn in housing is not clear, but most
\nforecasters expect an upturn in the New Year which should result
\nin a significant improvement in second half earnings over the
\ncomparable period."<\/p>\n
He said Boral predicted Australian housing starts to rise to
\n126,000 in 1996\/97 from an estimated 120,000 in 1995\/96.<\/p>\n
Expected cost savings of more than A$50 million from its
\nperformance enhancement programs would also boost prospects.<\/p>\n
Profit before abnormals slumped 45 percent to A$171 million,
\nwhich was at the lower end of analysts' forecasts of between
\nA$165 million and A$185 million.<\/p>\n
Analysts said investors were focusing more on Boral's longer
\nterm outlook as the profit fall was largely anticipated. Near the
\nclose of trading, Boral shares were six cents higher at A$3.07 on
\nturnover of around 4.4 million.<\/p>\n
"It's probably going to be later in the second half before
\nthey start to see any real demand improvements," Lance Jones
\nindustrials analyst David Aylward told Reuters.<\/p>\n
"But people have looked at this result and said 'it's a bad
\nresult but it's no worse than what we expected. There's no other
\nproblems emerging, let's get set now'."<\/p>\n
Berg said earnings also suffered as a result of a downturn in
\nthe European housing market and an unusually severe European
\nwinter which caused a three-month building halt.<\/p>\n
He said further divestments of non-core assets were likely in
\nthe current year with a program to reposition the group's assets
\nexpected to be completed by June 1997.<\/p>\n
Boral's building products division posted an operating profit
\nbefore abnormals and tax of A$127.09 million, down from A$246.26
\nmillion previously, while profits from construction materials
\nslipped to A$107.47 million from A$182.34 million.<\/p>\n
However, the energy business reported a 10 percent jump in
\noperating profit to A$143.09 million.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/boral-increases-asian-investment-1447893297",
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