Gypsum industry news

Australia: Boral has announced that it expects net profit after tax (NPAT) before significant items for the first half of financial 2014 to be US$90m, subject to finalisation of an audit review.

The result is underpinned by favourable weather conditions in Australia, strong volumes from major projects, a significant turnaround in the performance of the Building Products division and benefits from prior year restructuring activities. For 2014, the company expects a significant skew of earnings to the first half of the year compared to the second half of the year, due to lower contributions from major projects and reduced contributions from Boral Gypsum. The latter is expected following the move from a 100% owned division to a 50% joint venture, upon completion of the transaction with USG during the second half of 2014.

US/Australia: Boral and USG Corporation have entered into agreements to form a US$1.6bn joint venture producing wallboard in 12 countries across Asia, Australasia and the Middle East. Boral will contribute its Gypsum division to the joint venture, which includes its plasterboard operations in Australia and Asia. USG will contribute its Asian and Middle Eastern businesses, as well as exclusive access to its ceilings, cement board, fibre board, lightweight plasterboard and joint compound building products technologies in the joint venture's territory.

"The transaction is a major step forward for Boral and our vision is to create a world-leading interior linings business in Asia, Australasia and the Middle East," said Boral's CEO & Managing Director, Mike Kane.

The joint venture will be owned 50% by Boral and 50% by USG. In order to achieve an interest of 50% in the joint venture, USG will pay Boral up to US$575m in tranches. It will have a wallboard production capacity of 633Mm²/yr. The joint venture is expected to be completed by January 2014.

Management of the joint venture will be shared between Boral and USG with Frederic de Rougemont from Boral Gypsum who is appointed as CEO and Paul Monzella from USG Corporation who is appointed as CFO. USG will appoint the Chairman, Jennifer Scanlon, with the right to appoint chairman alternating between USG and Boral every two years.

Australia: Boral's Asian profit for its gypsum division has fallen by 10% for its 2012 – 2013 financial year, which ended on 30 June 2013.

The Australian building materials manufacturer calculated that, in the first full year following its acquisition of all of Boral Gypsum Asia, its earnings before interest and tax (EBIT) fell to US$51.2m from US$56.6m on a like-for-like basis. It blamed the decline on challenging conditions in South Korea and China, lower demand in Vietnam, plant ramp-off costs and the effects of lower capacity utilisation rates. However, on the same basis revenue for the subsidiary rose by 4% to US$502m in the period.

Boral's Australian gypsum division, Plasterboard Australia, saw its revenue fall by 5% to US$301m from US$316m. EBIT remained flat at US$22.5m.

"Boral Gypsum delivered softer underlying earnings in FY2013 due to cyclical challenges in some Asian markets and the cost impacts of investment ramp-ups in China and Indonesia. The business remains extremely well positioned for future earnings growth in Asia and Australia and has invested in three additional board lines that will increase net capacity in Asia by 16%," said Boral's chief executive officer and managing director, Mike Kane. For its gypsum businesses, Boral reported that capacity expansion projects at Chongqing, China (15Mm²/yr) and Ho Chi Minh City ,Vietnam (30Mm²/yr) have been delayed for completion in the second half of 2013 and early 2014 respectively.

Overall, Boral made a loss of US$192m for its 2012 – 2013 financial year. In the previous year it made a profit of US$160m. Its sales revenue rose by 5% to US$4.71bn from US$4.26bn in the prior year. Its profit after tax but before significant items rose by 3.2% to US$94.3m from US$91.4m. EBIT before significant items rose by 14% to US$206m from US$180m.

In the 2013 – 2014 financial year the division's performance is expected to remain strong, despite lower property sales and reduced major project work. However, overall the results in 2013 – 2014 are not expected to exceed those in 2012 – 2013.

Australia: Building materials group Boral has cut 100 jobs from its Australian business, taking total job losses from its global operations to 1100 since January 2013. A company spokesperson confirmed the job cuts to the Australian Financial Review ahead of a presentation by chief executive Mike Kane in Sydney.

Kane's presentation revealed Boral's strategy, including ambitious growth targets for the Asian gypsum and US businesses. Its gypsum business holds a 40-45% market share in Asia with a wallboard production capacity of 625Mm2/yr.

Australia: Building materials supplier Boral has reported a loss of US$25.1m for the first half of its 2012-2013 fiscal year, due to a sustained weakness in the Australian and US housing markets. It recorded a profit of US$157m in the same period in 2011-2012.

For the half-year ending on 31 December 2012, Boral reported a sales revenue of US$2.86bn, 14% above the previous year. Earnings before interest and tax (EBIT) (before significant items) increased by 3% to US$116m. Both figures benefitted from acquisitions that the company made. Profits were hit by US$79.6m impairment charges tied to the suspension of cement production at Waurn Ponds, Victoria and first half restructuring and redundancy costs.

"In Australia, Construction Materials delivered a solid 25% improvement in EBIT, but Building Products reported a very disappointing US$18.6m first half loss, following an US$11.4m loss in the second half of last year," said Boral's CEO and Managing Director Bob Kane.

He added that in the newly combined Boral Gypsum division, Australian Plasterboard was also significantly impacted by lower volumes and higher operational costs, reporting a 45% decline in EBIT. This decline was offset by a US$19.6m increase in reported earnings from Asia as a result of the acquisition of the remaining 50% interest of Boral Gypsum Asia in the 2012 financial year.

Australia: Boral, Australia's largest building materials supplier, has said that it will cut 1000 jobs from its global operations this fiscal year as part of a restructuring initiative intended to improve competitiveness. It is hoped that the changes will save US$95m/yr, with estimated savings of US$39m in 2013.

CEO and managing director Mike Kane described the company as 'burdened' with excessive overhead costs. "While this may be less obvious during the good times, it becomes critically exposed when times are tough," he said. The restructuring follows a 100 day review of the business conducted by Kane.

The majority of job losses are in Australia, where 885 positions will be axed. This includes the 90 roles Boral said that it would cut in December 2012 as it announced plans to suspend the production of clinker at its Waurn Ponds cement plant in eastern Australia. 15 jobs will be cut in the US.

In June 2012 the company reported that it had 14,740 employees, with around 8730 in Australia. A further reduction of 1420 employees will also take place due to Boral's previously announced divestment of assets in Asia and Australia.

Australia: Construction materials company Knauf has appointed Mark Norris as the managing director of its Australian division. Prior to this, Norris spent 11 years managing Knauf's North Asia Pacific business, eventually becoming general manager for Greater China.

"Mark's significant experience in the construction industry and his authoritative knowledge on Knauf's systems and solutions, is invaluable in driving growth in Asia Pacific and establishing Knauf as a full system provider of innovative products and systems in Australia," said Jan Kreibaum, CEO Asia Pacific.

In 2011, Knauf purchased Lafarge's gypsum business in Australia. It has two manufacturing facilities, over 220 employees and a national distribution network in the country.

Australia: Australian buildings materials company Boral has appointed the head of its US division, Mike Kane, as its new chief executive officer following the departure of Mark Selway in May 2012. Kane will assume the post on 1 October 2012.

Kane joined the company in February 2010 and has executive experience at four other materials companies including US Gypsum, Hanson Building Materials, Johns-Manville and Holcim

"He has spent the past two and a half years significantly realigning the US business to the changed market conditions and positioning Boral to take full advantage of the US market recovery," said chairman Bob Every.

Kane said Boral has an increasingly significant position in the global building materials industry and said its Asian plasterboard unit provides a growth opportunity in that region.

Australia: Boral has reported a 59% fall in second-half profit, hit by weak housing construction in Australia and delays in big resource and road projects. Boral, which removed its chief executive in May 2012, declined to give a fiscal forecast for the year ahead in light of uncertain market conditions, but said it would update investors at its annual meeting in November 2012.

Boral's net profit for the six months to June 2012 fell to US$35.7m from US$87m a year earlier, as calculated from full year figures. The building products maker issued profit warnings in April 2012 and June 2012.

"Earnings from our Australian business in the six months to June were hit by very weak housing and non-residential building activity, combined with delays and disruption from sustained rainfall across the east coast. The positive impact of price increases was more than offset by much weaker sales volumes in these markets and by higher costs, including from the wet weather," said Boral's chief executive officer, Ross Batstone.

Overall for the year to 30 June 2012 profit, after tax dropped by 42% to US$106m from US$183m. Sales revenue grew by 5%, to US$5.24bn from US$4.94bn, but this excludes the impact of the acquisition of Lafarge's 50% of Boral's stake in their Asian plasterboard joint-venture.

Boral's Building Products division reported a 11% fall in revenue for wallboard, to US$368m from US$413m. Sales volumes declined year-on-year by 14%. Overall for the division earnings before interest, taxes, depreciation and amortisation (EBITDA) fell by 46% to US$74.2m from US$138m. The company attributed the decline to the fall in Australian housing which began in year to 30 June 2011 but fell rapidly again in the second half of the 2012 fiscal year, and wet weather. Price increases, which averaged around 2-3% were insufficient to offset the significant impact of lower volumes.

Plasterboard Asia reported a revenue of US$317m since 9 December 2011, when Boral acquired the rest of the joint-venture from Lafarge. Revenues in Indonesia, Thailand and South Korea grew whilst income was below expectations in China, due to a slow-down in construction activity there.

Wallboard capacity increased throughout the year in China with the acquisition of a 35MM² plant in Shandong and on-going upgrade work increasing capacity from 13MM² to 43MM² in Chongqing. In Indonesia a 30MM² capacity upgrade is currently scheduled in completion for early 2013 and in Vietnam, a 30MM² upgrade in Ho Chi Minh City plant is progessing in line with expectations but with no given completion date.

For its 2013 outlook Boral expects continued weak housing demand, particularly for the first half of the 2013 fiscal year, to prove challenging for its Building Products division. It added that further interest rate reductions and/or improved consumer 'sentiment' are required for demand to lift in the six months ending June 2013. In Asia, continued growth in construction activity is expected together with more penetration by wallboard. While the residential market remains subdued in China, Boral's plant in Shandong will see growth of sales volumes in new high-end markets in Beijing, Tianjing and Shandong.

Australia: Mining corporation Rio Tinto has blocked a bid by Australian billionaire Len Buckeridge to win control of its gypsum deposits near Carnarvon, Western Australia by announcing it is restarting its ancillary operations at its mine.

Buckeridge, who is worth an estimated US$2.5bn and runs an integrated industrial empire that is one of the biggest homebuilders in Australia, wrote to the State Government in March 2012, demanding that Rio Tinto either restart its operations in Lake MacLeod near Carnarvon or hand over the gypsum rights to him under state agreements, which demand that companies 'use or lose' their deposits. Buckeridge's company supplies about 7% of the subdued Eastern States plasterboard market and more than half of Western Australia's needs, with CSR the other big producer.

Managing director of Rio's Dampier Salt subsidiary, Denise Goldsworthy, said that it had shuttered its Lake MacLeod gypsum operation because it was not financially viable, but booming demand in Asia, and Buckeridge's approach, had caused a rethink.

"Based on the company's projections of medium-term trends for gypsum, primarily in South-East Asia and Australia, Dampier Salt has decided to commence working through the State Government approvals process to resume its own gypsum mining operation targeted at these markets," Goldsworthy said. Dampier Salt gave no deadline for when gypsum would be mined again at the site.