• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Fat Tail Daily

Investment Ideas From the Edge of the Bell Curve

  • Menu
    • Commodities
      • Resources and Mining
      • Copper
      • Gold
      • Iron Ore
      • Lithium
      • Silver
      • Graphite
      • Rare Earths
    • Technology
      • AI
      • Bitcoin
      • Cryptocurrency
      • Energy
      • Financial Technology
      • Bio Technology
    • Market Analysis
      • Latest ASX News
      • Dividend Shares
      • ETFs
      • Stocks and Bonds
    • Macro
      • Australian Economy
      • Central Banks
      • World Markets
    • Small Caps
    • More
      • Investment Guides
      • Premium Research
      • Editors
      • About
      • Contact Us
  • Latest
  • Fat Tail Series
  • About Us
Latest

Boral [ASX:BLD] Upgrades Earnings Guidance as Turnaround Gathers Pace

Like 0

By Charlie Ormond, Monday, 13 November 2023

Building products giant Boral is the best performer on the ASX 200 today, after the company upgraded its FY24 guidance, saying its disciplined pricing and cost savings that were seen earlier this year will continue.

Building products and cement giants Boral [ASX:BLD] have seen its shares jump by 5.3%, trading at $4.94 per share today as the company makes strides in its turnaround strategy.

The company operates more than 300 industrial sites nationwide, producing concrete, cement, asphalt, and quarrying stone. They also recycle construction and demolition waste.

In its statement today, the company lifted its FY24 guidance on underlying earnings before interest and tax (EBIT) to $300–330 million, up from $270–300 million.

The upgrade comes just over a year after the appointment of CEO Vik Bansal, who billionaire Kerry Stokes tasked to return the company to profitability. The Stokes family owns a 73% stake in the company after a drawn-out takeover in 2021.

The company suffered significant losses during the pandemic era and sold down its $4 billion in US assets to focus on its Australian construction roots with construction materials.

Under Mr Bansal, the company has been building momentum, with shares up 71.5% in the past 12 months as he set out on cost-cutting and repricing efforts.

What does today’s share price jump mean for the company moving forward?

ASX:BLD stock chart boral

Source: TradingView

Boral refocuses

Boral said the upgrade today incorporated a better financial result seen in the four months to October and was confident that those ‘gains could be held the remainder of the fiscal year’.

For the construction giant, the major turnaround was seen in FY23, with heavy cost cutting and price increases that some could argue went above inflation markups.

Group revenue has steadily increased, with a 17% increase last financial year to $3.5 billion thanks to price 10–12% increases across its products.

These increases and cost-saving initiatives improved the company’s EBIT by 106% to $232 million.

The company also returned its margins to prior levels with a 289-basis point increase to 6.7%. Boral is targeting double-digit margins as the next primary goal in its strategy.

Boral CEO Vik Bansal said:

‘We are pleased to upgrade our FY24 guidance, with year-to-date performance reflecting greater discipline in the pricing and cost from our operating model. Price realisation remains extremely important in the current inflationary environment.’

While its financials appear to be returning to health, the company is now under pressure from some investment funds.

In its last general meeting in October, the board narrowly avoided a strike in its remuneration report as funds let the board know they were unhappy with the company for walking back its 2025 carbon emission targets.

Boral said the targets were ‘unrealistic’ and ‘akin to greenwashing’ if they were kept at that level, due to the unlikelihood they would be reached.

In a letter to the board, investors HESTA, AMP, Australian Ethical, and Plato Investment Management warned that the revised targets ‘risked its long-term value’and that any new targets should be ‘appropriately aligned with an orderly and ambitious transition’.

Outlook for Boral

With the ship set in the right direction, the company should be in a better position for the years ahead.

This is an impressive accomplishment, considering the economic background in which this has been achieved.

But we should also consider the longer-term implications of the company’s turnaround.

The 10% bump in projected earnings from hard cost-cutting and rising product prices — neither of which bake in structural longer-term performance.

Let’s look at the pricing as an example. The company said its repricing was ‘long overdue’and had been spurred by jumping cost trends due to inflation.

ASX:BLD boral price trends over time

Source: Boral

We can see cost jumps that need to be addressed here, but the company may have gone too far in a fragile construction environment.

This is significant if we consider that between July 2022 and April 2023, 1,709 construction companies across the country went bankrupt, according to ASIC.

Between an ailing construction sector and heavy cost savings, the company could run into far more long-term headwinds than others if the headwinds continue in the coming calendar year.

There is still time for the company to address these challenges, as it now stands in a leading position and can invest forward from here. As Mr Bansal said:

‘Boral’s competitive advantage comes from its vertical integration, enviable infrastructure assets, footprint and strong brand.’

But there could be one factor that threatens this.

Green roadblocks

When Vik Bansal thinks about the energy transition, ‘his mind goes to the 5500 blue-collar workers that work in the manufacturing plants across the country’.

At the latest energy summit, Mr Bansal became Australia’s best example of the actual cost of the stalling energy transition.

Not enough renewables in the pipeline, transition powerlines behind schedule, rooftop solar grids isolated, slow decarbonisation efforts — all of these are adding to the problem.

Mr Bansal has not been shy to tell whoever would listen what the transition has cost the company. In early October, at the AFR Energy & Climate Summit, he was very candid about the impacts of the high renewables requirements and high energy costs on the business.

‘At a certain price during the day, when the price goes up to a certain level, manufacturing stops. Because we’ve worked out economically, it’s actually better to have thousands of people waiting idle for the prices to come down than actually do the work.’

Our Editorial Director, Greg Canavan, has been talking about the costs of the ‘Net Zero’ movement for some time.

We have a new book on the subject coming soon, so watch this space!

For now, we haven’t just been looking at the problem but also the solution.

Click here to learn more about nuclear and how it can be a solution for our future, plus five companies that should be on your watchlist.

Regards,

Charlie Ormond

For Fat Tail Daily

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Charlie Ormond

With more than a decade of fintech experience, including stretches in critical roles at budding start-ups and tech titans like Microsoft, Charles is squarely focused on investment opportunities in emerging sectors. Interestingly, his academic foundation in zoology provides an unexpected edge! He applies his scientific training with his analytical mindset to figure out tomorrow’s winners and losers. While traditional institutions stick with ‘safe’ stocks, Charles goes straight for seismic shifts in crypto and AI. He’s an early adopter of both technologies.

Now he’s on a mission to empower everyday investors. He decodes groundbreaking developments in technology stocks before they grab mainstream attention. So, if you seek an unconventional perspective to help capitalise on what’s next in fintech, look no further.

Charlie’s Premium Subscriptions

Publication logo
Alpha Tech Trader
Publication logo
James Altucher’s Early-Stage Crypto Investor Australia

Latest Articles

  • Tick, tock: there’s a boom brewing in one sector…
    By Callum Newman

    All the old hands say you’re supposed to buy resources when they’re down in the dumps. That’s the theory. It’s the timing that’s the bitch. Here’s some help with that…

  • Buy oil when there’s peace in the streets
    By Nick Hubble

    While stocks have recovered from the tariff tantrum, the oil price remains in the doldrums. And that means investors can still join the relief rally at a discount.

  • Vicuña: The Greatest Mineral Discovery of Our Lifetime
    By James Cooper

    James Cooper returns to his geologist roots, revealing the industry’s most critical exploration discovery made in decades…The Vicuña District in Argentina.

Primary Sidebar

Latest Articles

  • Tick, tock: there’s a boom brewing in one sector…
  • Buy oil when there’s peace in the streets
  • Vicuña: The Greatest Mineral Discovery of Our Lifetime
  • “Green gold”…primed for a comeback!
  • Don’t Get Swept Up By the Herd: Bulls & Bears in an Age of Social Media

Footer

Fat Tail Daily Logo
YouTube
Facebook
x (formally twitter)
LinkedIn

About

Investment ideas from the edge of the bell curve.

Go beyond conventional investing strategies with unique ideas and actionable opportunities. Our expert editors deliver conviction-led insights to guide your financial journey.

Quick Links

Subscribe

About

FAQ

Terms and Conditions

Financial Services Guide

Privacy Policy

Get in Touch

Contact Us

Email: support@fattail.com.au

Phone: 1300 667 481

All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

Fat Tail Logo

Fat Tail Daily is brought to you by the team at Fat Tail Investment Research

Copyright © 2025 Fat Tail Daily | ACN: 117 765 009 / ABN: 33 117 765 009 / ASFL: 323 988