Boral (ASX: BLD) announced strong 1H FY2023 results; Shares up on ASX

Key Takeaways:

• Boral Limited has released its 1H FY2023 results.
• NPAT increased 53% to AU$56.8 million.
• In 2H FY2023, the Company expects its EBIT to be in line with 1H FY2023.

On 08 February 2023, Boral Limited (ASX: BLD) released 1H FY2023 results and reported a 53% growth in its net profit after tax (NPAT). The adjusted EPS improved by 50% to AU 5.1 cents per share compared to the previous corresponding period (pcp). Following the announcements shares zoomed up on ASX.

Boral is the largest integrated construction materials company in Australia. It produces and sells various construction materials, including quarry products, cement, concrete, asphalt, and recycled materials.

1H FY2023 highlights:

Net revenue increased 12% to AU$1,681.1 million on pcp. The revenue during the period was driven by volume and price.

• EBITDA for the period was AU$206.5 million, up 7.2% compared to 1H FY2023, driven by price and cost discipline, which helped offset the sharp surge in costs across the business.
• EBIT increased 15% to AU$95.3 million.
• Operating Cash Flow improved significantly by 37% to AU$117.4 million.
• On a statutory basis, NPAT was AU$89.5 million for 1H FY23. It declined 91% compared to 1H FY2022, which included AU$1,002.4 million of income from discontinued operations mainly relating to the profit recognised on the sale of the North American Building Products business.
• Seeing the performance of the free cash flow as well as the limited availability of franking credits, the Boral board decided not to pay the interim dividend.

Performance overview based on:

Strategy:

During the period, a new operating model was introduced within and all over the business.

• Standardisation and Simplification through PEMAF (People, Environment, Markets, Assets, Financials) framework is underway.
• Executive leadership team is now substantially in place.

Pricing, Volume & Costs:

Average sales price was higher across all the regions with varying degrees of traction.

• Growth in volume increased by over 4%.
• Energy costs increased AU$40 million compared to 1H FY2022. It includes the benefit from hedging in both periods.
• Total direct costs remain high. The Company continues to focus on cost discipline and price traction to achieve its objective of margin expansion.

Balance Sheet Overview:

During the period, the Company reduced its cash and debt liabilities, driven by debt reduction measures taken during the period. As a result, BLD could repay AU$629 million.

• Total Assets declined from AU$3,794.7 million in 1H FY2022 to AU$3,794.7 million in 1H FY2023.
• Total Liabilities reduced from AU$2,923.8 million in 1H FY2022 to AU$ 1,826.1 million in 1H FY2023.
• Net Assets declined significantly from AU$ 4,988.6 million in 1H FY2022 to AU$1,968.6 million in 1H FY2023.

Cash Flow highlights:

Cash flow from operating activities stood at AU$117.4 million, up AU$31.7 million, mainly driven by improved EBIT performance as well as lower interest and tax payments.

• The 1H FY22 investing cashflow comprises AU$3,053.5 million of net proceeds from business disposals mainly linked to North American Building Products.

In FY2023, the Company’s priorities include:

Embedding the new operating model within and throughout the business.

• Safety and Zero Harm initiatives with continuing improved organisational health and culture.
• Commercial discipline as well as consistency across the business. The focus will be on volume and price across all the regions and product lines. BLD will also focus on price realisation instead of cost recovery.
• Customer service and sales efficiency.
• Cost focus across all areas of spending in the Profit & Loss to take care of a few inflationary pressures.
• The focus will be given to improving the cash conversion cycle.

In 2H FY2023, the Company expects its EBIT to be in line with 1H FY2023.

Stock Information (AEDT 12:29 PM):

BLD shares are trading at AU$3.895, up 10.653% from the previous close. At this time, BLD is the top gainer on ASX 200. It has a market cap of AU$3.88 billion. 

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