Gypsum industry news

Australia: US-based private equity company Lone Star Funds is considering acquiring Boral, according to the Australian newspaper. Lone Star Funds purchased building materials manufacturer Forterra from Heidelberg Cement. Boral later formed a joint venture with Forterra Brick in the US in 2016. In a separate deal Lone Star Funds later purchased German building materials producer Xella. Despite growing revenue from continuing operations, Boral’s net profit after tax fell by 7% year-on-year to US$301m in the year to 30 June 2019.

Australia: USG-Boral’s earnings have fallen due to a poor construction market in South Korea. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 6% year-on-year to US$170m in the financial year to 30 June 2019 from US$181m in the previous year. Its revenue grew by 2% to US$1.08bn from US$1.06bn. The joint venture said that, excluding South Korea, earnings were ‘steady’ as lower earnings from Indonesia, China and the Philippines were offset by increased contributions from Thailand, Vietnam and India, as well as a continued strong contribution from Australia.

The company also announced that Boral has entered into an agreement with Germany’s Knauf to form an expanded 50:50 plasterboard joint venture in Asia and for Boral to return to 100% ownership of USG Boral Australia & New Zealand. Completion of the deal is subject to regulatory approval. It follows the acquisition of USG by Germany’s Knauf in early 2019.

Australia/US: USG-Boral will resume 100% ownership of its Australia and New Zealand gypsum wallboard operations, subject to a call option for Knauf to buy back 50% within five years.

Boral CEO Michael Kane has commended Boral’s Sheetrock brand’s substantially strengthened position by comparison to that at the time of Knauf’s US$7bn acquisition of USG in April 2019, since which time Knauf has held 50% of USG-Boral’s gypsum wallboard business in Australia and New Zealand.

Boral will continue its joint operations with Knauf across Asia, at the centre of which are USG-Boral Asia’s purchase of Knauf Asian Plasterboard for US$533m, and its sale of its Middle Eastern ventures to Knauf for US$50m.

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.

South Korea: USG Boral has appointed Hyuk-Joon Kwon appointed as its chief executive officer (CEO) for its South Korean operations. Prior to his role at USG Boral, Kwon was President & Zone Operations Director of Otis Elevator Korea. He was also previously the General Counsel who advised on various aspects of the business, including corporate restructuring, investments and strategy for the company.

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 chief executive officer, Mike Kane, expects that its USG Boral joint venture’s earnings will grow by 10% in its financial year to the end of June 2019. He told shareholders at the company’s annual general meeting that improvements in markets in China, Indonesia, Thailand and India would counteract slowing residential construction in Australia and South Korea, according to the Australian newspaper. He also said that Boral is conducting two valuations of USG Boral following the merger of USG and Knauf. The company is considering whether to buy the other half of the joint venture or whether to find another partner.

Thailand: USG Boral Thailand, also known as Siam Gypsum, has won the Green Industry Award at the Green Industry Forum Seminar. The award was presented by Suthon Nikomkate, Deputy Secretary-General of the Office of Industrial Product Standards, Ministry of Industry to Wuttichai Ponmanop, Factory Management Manager, Siam Gypsum. The gypsum wallboard manufacturer was awarded the accolade for its focus on its production process, environmental management and its social environmental responsibility.

Australia: USG Boral’s earnings have been hit by competition in Indonesia, Thailand and Vietnam, higher input costs including paper and a one-off cost. Earnings before interest, taxation, depreciation and amortisation (EBTIDA) were negatively affected by a one-off cost of US$8m associated with a three-month closure of the port of Thevenard in South Australia and an unfavourable operational reserve adjustment in India. Its EBITDA fell by 6% year-on-year to US$196m in the financial year to 30 June 2018 from US$207m in the same period in 2017.

However, despite this its sales revenue rose by 7% to US$1.15bn from US$1.08bn. This was attributed to continued adoption of its Sheetrock products and technical board in Australia, Korea, China and Thailand. Overall board volumes increased by 3% year-on-year and technical board, which represents 20% of volumes, grew by 20%. Gypsum wallboard volumes grew in Australia and China, and ‘strong’ price gains were achieved in South Korea and China.

“This long-term growth business has delivered impressive and uninterrupted year on year growth since the formation of the joint-venture in 2014, with FY2018 being a consolidation year. Australia, Korea and China delivered strong top line growth in FY2018, offsetting pressures in countries such as Indonesia, Thailand and Vietnam and some unexpected one-off cost impacts,” said chief executive officer and managing director Mike Kane. He added that the company is currently considering an expanded joint-venture with Germany’s Knauf in relation to its proposed acquisition of USG. However, Boral is also considering a return to 100% Boral ownership.

Australia: Boral Ltd has announced that its profit for the first half of the 2017-2018 fiscal year (from 1 July 2017 – 31 December 2017) rose by 13%. The company benefited from the 2017 acquisition of the US-based building products firm Headwaters Inc. and continued growth in its Australian business.

It reported a net profit of US$136.0m for the six month period, a rise of 12.7% compared to the same period of the 2016 – 2017 fiscal year when it made US$120.7m. Its profit before amortisation and significant items increased by 58% to US$$186.5m.

"These strong results confirm that our transformation strategy is on track," said Chief Executive Mike Kane. "The Headwaters acquisition has helped transform Boral into a construction materials and building products group with a greater geographic reach and improved prospects for growth."

Boral’s US business, which was only breaking even in 2015 – 2016, recorded a fourfold rise in earnings, despite adverse impacts from bad weather, including two hurricanes.

Kane also said Boral’s Australian arm, its largest divison, was ‘exceptionally strong’ during the half. Boral reported a 12% rise in earnings before interest, tax, depreciation and amortisation from that business.

"Higher revenues and earnings were driven by increased spending on infrastructure, in line with our expectations that a large proportion of our work would gradually shift from residential to infrastructure projects, primarily in the eastern states," said Kane.
Boral reported a 1% dip in earnings from its USG Boral division, a joint-venture with USG Corp., the largest US maker of gypsum wallboard, which operates throughout Asia, the Middle East, Australia and New Zealand.