Gypsum industry news

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.

China: Beijing New Building Materials has announced that its holding subsidiary Taishan Gypsum will spend more than US$39.3m building two gypsum wallboard plants and one cement retarder project using industrial by-product gypsum.

Taishan Gypsum will build one of its wallboard plants in the Shanghang Jiaoyang industrial park in Longyan City, Fujian Province. The project is estimated to cost roughly US$18.6m, of which US$5.6m will be raised by the company itself and US$13m from a bank loan.

US: USG Corporation (USG) has announced that it has entered into a definitive agreement for the sale of its wholly-owned European business operations to affiliates of Gebr. Knauf Verwaltungsgesellschaft KG for approximately US$80m. The amount is subject to adjustment based on working capital and net debt levels at the closing of the deal.

The businesses being sold include the manufacture and distribution of Donn brand ceiling grid and Sheetrock brand finishing compounds throughout Europe, Russia and Turkey.

"While USG's European operations have been performing well, we prefer to focus our investment in higher growth markets," said James S Metcalf, Chairman, President and CEO. "We contacted more than 60 potentially interested parties, including both strategic buyers and private equity firms, and decided to sell the businesses following a thorough evaluation that produced strong interest. We're pleased with the value we are receiving for this group of assets."

US: Eagle Materials Inc has reported a 29% rise in total revenue for the first quarter of the 2013 fiscal year which ended on 30 June 2012. The North American building materials producer noted revenue of US$154m for the quarter, up from US$120m in the same period in 2011.

Eagle's gypsum wallboard sector reported a 36% increase in revenue to US$70.2m from US$51.3 in 2011. Improved wallboard net sales prices were the primary driver of the quarterly earnings increase in the company's gypsum wallboard and paperboard division. Sales volumes increased by 11% to 42.5MM² from 38.3MM².