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Boral’s earnings projection soars by 10%

Shares in cement and building products group Boral (ASX:BLD) surged by more than 7% early on Monday after the company surprised with a 10% increase in projected earnings for the 2023-24 financial year.

Boral now anticipates underlying earnings before interest and tax (EBIT) to be in the range of $300 million to $330 million, up from the previous August estimate of $270 million to $300 million. This represents a substantial rise of over 42% from the 2022-23 EBIT of $231.5 million, assuming the estimate holds through to next June.

The most significant beneficiary of this improvement is Kerry Stokes and his Seven Group Holdings, which owns approximately 71.6% of Boral.

Boral’s improved performance is expected to offset a projected decline in the near-40% owned Seven West Media’s TV ad revenues for the December half-year, along with increased interest costs and debt due to a $60 million raid on ARN. This will raise Seven West’s gross debt to well over $350 million.

Seven Group Holdings will hold its annual meeting in Sydney on Thursday, and Boral’s performance will be the top news for shareholders, with Stokes and his family being the largest shareholders through Australian Capital Equity. Stokes stepped down as chair in April 2021.

Boral announced on Monday that “the revised FY24 guidance incorporates a better financial result for July-October, achieved through price traction and cost management across each of Boral’s businesses, and improving confidence that the gains achieved in the first four months could be sustained for the rest of the fiscal year.”

Boral CEO Vik Bansal stated, “We are pleased to upgrade our FY24 guidance, with year-to-date performance reflecting greater discipline in pricing and cost management from our operating model. Price realization remains extremely important in the current inflationary environment. Volumes year to date have been relatively steady, and at this stage, we expect this to continue through the remainder of FY24.”

Boral is set to report its December half results on February 9th.

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