Gypsum industry news

Australia: Boral, already dealing with financial difficulty even before the coronavirus pandemic, has withdrawn its full-year profit guidance and warned that it will likely have to re-work its complex wallboard buyout transaction with USG / Knauf. The US$441m deal, announced in August 2019 with Knauf will likely need to be changed, after the Australasian component of it attracted the attention of the Australian Competition and Consumer Commission (ACCC).

Under the complicated deal between USG Boral and Knauf, Boral was to pay US$200m for the other 50% of USG Boral that it did not already own in Australia, and US$241m for a 50% stake of the plasterboard joint venture in Asia. Knauf then had a call option to return to 50% ownership of the Australasian business within five years.

However, the ACCC is now looming as a roadblock. "As Boral and Knauf work with regulators as part of an ongoing process to obtain the relevant approvals, Boral's view now is that the ACCC is unlikely to approve the call option in relation to the Australian and New Zealand business," said Boral in a statement. This means a range of other options will be considered for the transaction.

Australia: Boral has announced that it is ‘considering a range of potential options’ regarding its planned resumption of 100% ownership of USG Boral Plasterboard from Germany-based Knauf in light of the fact that the Australian Competition and Consumer Commission (ACCC) is ‘unlikely to approve the call option in relation to the Australia and New Zealand business.’ The call option would have given Knauf the right to return to 50% ownership of USG Boral Plasterboard within five years. The ACCC’s likely intervention in the transaction is believed to have to do with Boral’s financial situation.

Australia: Boral says that it may be ready to announce its plans with its USG Boral joint venture in August 2019. It is currently conducting due diligence on the joint venture’s operations in Asia following Knauf’s acquisition of USG in early 2019, according to the Australian newspaper. Forward options include established a new Asian joint-venture with Knauf or buying USG Boral’s gypsum wallboard business in Australia, New Zealand, Papua New Guinea and islands in the South West Pacific. However, Boral’s chief executive officer (CEO) Mike Kane said that there might not be enough time to arrange a deal by the publication of Boral’s full year results in August 2019.

Australia: Ord Minnett, a financial services company, estimates that Boral could pay as little as US$0.5bn to buy the other half of USG-Boral, the joint venture it runs with USG. The financial company has made the forecast following the on-going acquisition of USG by Germany’s Knauf, according to the Australian newspaper. It believes that Boral is in a strong position given falling value of the joint venture and problems with Knauf’s geographical asset base following its purchase.

Australia: Boral's revenue from its gypsum wallboard join venture, USG Boral, has risen by 2% year-on-year to US$566m in the first half of its financial year, which ended on 31 December 2016, from US$552m in the same period in 2015. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 18% to US$116m from US$98.5m. It attributed the sales growth to growth in its Sheetrock plasterboard product. The on-going rollout of Sheetrock is scheduled to continue until the end of 2017. Regionally, sales growth in South Korea, Australia and Thailand offset a declining market in China.

The building materials company added that its joint venture had started building a new warehouse at its USG Boral's Dangjin facility in South Korea in the reporting period. The upgrade at the site is intended to add incremental capacity and support the longer-term addition of at least 30Mm²/yr of plasterboard production capacity at the site, which has existing capacity to produce around 70Mm²/yr. The investment will be self-funded through the joint venture.

Overall, Boral's sales revenue fell by 5% to US$1.6bn from US$1.68bn. However, its profit after tax rose by 9% to US$114m from US$105m. It attributed this to a 'solid' performance in Australia combined with good earnings from Boral USA and USG Boral.