Boral turns it on, and more to come

Compared to last year's $153.4 million, the result represented a 51 per cent rise in net profit excluding the $26 million Boral made in 2000-01 from the sale of several businesses.

Investors were further encouraged after the company's managing director, Rod Pearse, predicted further profit growth over the next 12 months despite signs that housing demand will cool in 2003.

``We don't see [the result] as a one-year wonder," he said.

Boral shares soared to an all-time high of $4.40 before closing 3c higher at $4.27.

While Mr Pearse expected the rise in non-residential construction to take up the slack, he said Boral could still trade strongly into the housing downturn, given the benefit of the three to six months lag between orders and deliveries.

He said other sources for profit growth over the year were the planned price increases for concrete products this December and strong growth from Boral's Asian and US businesses.

Revenue in 2001-02 rose a modest 6 per cent to $3.49 billion, compared to the strong profit growth and increased margins.

Mr Pearse said the 31 per cent rise in earnings before interest and tax to $343 million over the year comprised $10 million from higher concrete prices, $25 million from operational improvements, $40 million from higher volumes and $30 million from growth. Earnings per share rose 27c to 34c.

The final dividend is 10c per share, franked to 7.5c. It is payable on September 19, and compares to last year's 9c franked to 3.15c. The total dividend for the year was 19c, up 1c.

Mr Pearse said raising franking levels to 75 per cent was to give an ``opportunity for shareholders to enjoy the results".

The result was the final vindication of the group's move in February 2000 to demerge its building materials and energy divisions Origin Energy into two separately listed companies, he said.

Before the demerger, Mr Pearse said Boral's ``focus was harvesting the cash from the building side of the business into the energy side".

Aside from improved earnings, Mr Pearse said another sign of the good health of the ``new" Boral was the 64 per cent rise in operating cash flow over the year to $392 million. Net debt fell $102 million to $881 million.

Over 2001-02, gearing (net debt to equity) fell from 53 per cent to 45. Mr Pearse said this gave more scope for expansion overseas. Five years ago its gearing was more than 80 per cent.