Gypsum industry news

Australia: Boral has announced that it expects gross earnings from its Gypsum Asia unit to increase as it reported an upbeat longer term outlook for the business in the rapidly growing Asia market.

It is estimated that earnings before interest, tax, depreciation and amortisation (EBITDA) in 2012 will jump by 19% year-on-year to US$108m, according to Frederic de Rougemont, chief executive of Boral Gypsum Asia.

De Rougemont said that there is strong economic growth forecast across most major markets in Asia, where increases in public investment are driving growth in non-residential construction. Speaking to analysts in South Korea, he added that increasing urbanisation is driving growth in residential construction.

"Asia is expected to become the world's largest plasterboard market in 2014, while China will become the biggest plasterboard market globally by 2015," he said. "Among the global players, BGA has the leading market position throughout Asia" with a 15% estimated market share including China.

Australia: Lafarge has announced the sale of its Australian gypsum operations to Knauf for net proceeds of Euro120m.

Lafarge's Australian Gypsum business represents two manufacturing facilities for gypsum wallboard and other compounds along with a national network of distribution and retail centres. In 2010, Lafarge's Australian operations generated EBITDA of Euro13m. The completion of this deal is expected to happen in the third quarter of 2011.

This news follows Lafarge's decision to sell its gypsum interests in Europe and South America to the Belgian Etex Group (announced on 14 July 2011 – read full story here). Under this proposed agreement, Lafarge would receive net cash proceeds of approximately Euro850m and in addition would receive a 20% interest in the new partnership. The partnership would combine the European and South American Gypsum activities of both groups.

World: With Boral's recent acquisition of Sunshine Coast Quarries, the company has spent USD250m in Queensland since April 2011. Boral's head of strategy and mergers and acquisitions, Matt Coren, said this move did not necessarily reveal a special focus on the state (or indeed on cement and concrete), saying, "You'll see us continue to invest in other markets."

Boral's recent acquisition spree, along with Coren's comments, has raised speculation that the group may be eyeing up bigger and more lucrative offshore investments. Following the decision by France's Lafarge to sell 80% of its European gypsum assets to Etex Group (announced on 14 July 2011 – read full story here), the spotlight has again swung to the possibility that Boral may be considering the French gypsum and plaster company's Asia-Pacific and North American assets. Boral and Lafarge have an existing joint venture plasterboard business in Asia and it is thought the Australian building group would like to increase its 50% stake or even buy out its partner entirely.

Credit Suisse has indeed recently labeled Boral as the 'natural owner' of Lafarge's remaining gypsum assets. Rohan Gallagher, an analyst with Credit Suisse said that Boral would need to raise equity to do the deal, but expressed doubt that facilities in the United States and Mexico (including six wallboard plants with over 300Mm2/yr wallboard capacity), would not be a wise choice for Boral in the present climate.

Nomura analyst Simon Thackray said that if Boral could increase its stake in the Asian joint venture by a further 10% and purchase a 60% interest in Lafarge's US business the group would need to spend about USD300m, which could be heavily dilutive.