Gypsum industry news

Australia: Boral has reported that, in most jurisdictions, its activities are currently considered to be within the critical infrastructure and construction sectors that are permitted and encouraged to continue as essential businesses. This includes Boral’s US Fly Ash business, which provides an essential service to the energy sector. In some areas however, particularly in North America and Asia, more stringent mandates and restrictions have resulted in temporary closures of several operations.

In addition, demand is declining in most markets and is expected to continue to decline, particularly in residential construction markets where the pipeline of work is substantially reducing in all geographies.

As a result, where it has sufficient inventory levels to supply customers, production curtailments are planned and are now taking place, including shift reductions and temporary plant closures. Boral says that these actions will help to conserve cash and minimise any unintended inventory build-up.

Boral is supporting employees impacted by temporary closures with access to paid leave, unpaid leave, flexible and remote working arrangements (where possible) and assistance with accessing relevant government support.

Australia: Boral has updated the market on its transaction with Knauf in relation to its USG Boral joint venture. On 19 March 2020, Boral announced that its view was that the Australian Competition and Consumer Commission (ACCC) was unlikely to approve the call option in relation to the Australian and New Zealand business. In further discussions between Boral and Knauf, it has now become clear that obtaining the necessary regulatory approvals required to allow the transaction to be implemented as signed in August 2019 is not achievable by the 30 June 2020 deadline. Other conditions to the transaction also remain outstanding.

As a result, Boral and Knauf will consider a range of potential options, with Boral’s objective being to target a cash neutral transaction rather than a transaction with a significant funding requirement for Boral. Discussions are at a preliminary stage and any revised transaction remains subject to agreement between Boral and Knauf, and ultimately will also require the approval of regulators including the ACCC and New Zealand Commerce Commission (NZCC). Given this, the company’s pre-existing US$400m acquisition bridge facility, put in place for the purpose of completing the transaction with Knauf, was allowed to lapse.

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 has seen a 40% decrease in its profit during the first half of its fiscal year a period that ended on 31 December 2019. Its profit fell to US$90.4m for the period from US$151m a year earlier. Boral said that this was due to higher costs and weak housing activity in Australia and South Korea. It was also affected by the costs of transactions between its USG-Boral joint-venture partner USG and Knauf, which bought USG in 2019, along with its interest in USG-Boral.

Australia: The board of directors of Boral has announced that Boral CEO and managing director Mike Kane will declare his retirement after delivering the company’s whole-year 2020 (1 July 2019 to 30 June 2020) results in mid-August 2020. Kane said, “I am proud of Boral’s people and I thank them for their continued support as well as the support of our customers. I remain committed to Boral and look forward to delivering Boral’s full-year 2020 results and facilitating a smooth leadership transition.”

The Sydney Herald newspaper reported that Boral revised its whole-year net profit forecast up from US$214m to US$228m, which would be down by 19% from US$281m in the Australian financial year 2019.

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.