Gypsum industry news

Australia: Boral has recorded an increase in full-year profit, buoyed by the return to profitability of its US business for the first time since 2007, a pick-up in local demand and cost-cutting initiatives.

Australia's largest building materials provider posted a net profit of US$183m in the year to 30 June 2015, a 48.3% increase on the previous year's US$123m. Underlying profit rose by 45% to US$178m. However, Boral's total revenue over the same period fell by 15.2% to US$3.15bn.

Boral chief executive Mike Kane said that the results reflected the benefits from the company's overhaul of its business which reduced the size of its workforce and resulted in the closure of some unprofitable operations. "We've improved Boral's cost base, strengthened the balance sheet and we are managing our portfolio of businesses more efficiently," he said.

In the current 2016 fiscal year, Boral said it will focus on maintaining underlying earnings from construction, materials and cement, while property earnings remain uncertain. Building products are seen remaining broadly steady, while USGBoral will deliver further underlying improvement.

Canada: Continental Building Products has reported that its net sales, operating income and wallboard sales all grew in the second quarter of 2015.

"We produced another quarter of strong cash flow as a result of our disciplined operations, efficient cost structure and sharp focus on execution as we continue to grow our business," said Jay Bachmann, Continental Building Products' CEO. "During the quarter, each of our regions experienced stronger construction activity, enabling us to deliver solid growth in our wallboard shipments. We actively managed our costs to achieve significant operating leverage on higher sales and repurchased approximately 2% of our outstanding shares for US$20m while also reducing our debt leverage. We believe that we continue to be well positioned to capitalise on improving construction activity in our markets to enhance our profitability and deploy our capital into additional value-enhancing opportunities."

Net sales for the second quarter of 2015 grew by 7.9% to US$111m. The growth was primarily driven by 8.1% higher wallboard volumes to 567Mft2. The average mill net price grew by 0.7% year-on-year. At constant currency, the average mill net price increased by 1.5%. For US shipments, the average mill net price increased 1.4% year-on-year. Gross profit grew by 41.1% to US$29.5m and gross margin grew to 26.6% from 20.3% in the same quarter of 2014, primarily as a result of operating leverage achieved through higher wallboard volume and favourable energy costs. Operating income was US$4.3m compared to US$12.8m in the same period of 2014. Adjusted net income grew to US$10.2m from US$4.7m in 2014. Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 24.4% to US$33.3m.

In the second quarter of 2015, Continental Building Products repurchased 913,200 shares of common stock at an aggregate purchase price of US$20m from an affiliate of Lone Star in a private transaction in connection with the secondary public offering in May 2015. It also used cash flow from operations for the voluntary repayment of US$10m of debt. The next principal payment on its debt not required until August 2020.

US: Eagle Materials has reported that in the first quarter of its 2016 fiscal year, which ended on 30 June 2015, its revenues grew by 7% to US$285m, its earnings before interest and income taxes grew by 1% to US$60.4m, its earnings before interest, taxes, depreciation and amortisation (EBITDA) grew by 10% toUS$84.6m and its net earnings grew marginally to US$37.8m.

First quarter net sales prices improved across nearly all businesses, with the most notable increases in the cement and concrete businesses. Extraordinarily wet weather in many of itscement markets, including Texas, Oklahoma and Colorado, adversely impacted the timing of cement sales volumes during the first quarter. However, Eagle Materials reported that its underlying demand for its cement continues to remain strong. In addition, all of its cement facilities completed their planned annual outages during the first quarter and cement maintenance costs were approximately US$3m higher than the prior year's first quarter.

Gypsum wallboard and paperboard revenues for the first quarter totalled US$136m, which were slightly lower than the same quarter of 2015. The average gypsum wallboard net sales price grew by 1% year-on-year, while wallboard sales volumes grew by 1% to 577Mft². Gypsum wallboard and paperboard reported first quarter 2016 operating earnings grew by 4% to US$46.9m. The earnings improvement reflects improved wallboard net sales prices, sales volumes and lower energy and paper costs.

US: USG Corporation has reported results for the second quarter of 2015. On a consolidated basis, net sales grew by 2% year-on-year to US$970m. Operating profit improved by 7% to US$105m. Adjusted operating profit was US$118m in the second quarter of 2015, compared to an adjusted operating profit of US$87m in the second quarter of 2014. USG generated US$79m or, on an adjusted basis, US$78m during the quarter. Adjusted results exclude results from Gypsum Transportation Limited (GTL), a shipping operation that the company has exited, included in the gypsum segment.

"All of our businesses expanded their margins and contributed to our strong second quarter," said James S Metcalf, chairman, president and CEO of USG. "We generated the highest level of net income since the fourth quarter of 2006, when demand was 50% higher."

USG's gypsum segment generated US$98m of operating profit in the second quarter of 2015. On an adjusted basis, operating profit in the gypsum segment improved by US$20m, led by the US gypsum business. Wallboard provided US$14m of improved operating profit and the surfaces and substrates businesses contributed US$9m in total incremental profit. Favourable pricing and improved volumes coupled with lower natural gas costs and operational efficiencies drove the margin expansion in the US gypsum business.

"In the second quarter, our gypsum segment realised its strongest operating margin in over eight years," said Metcalf. "We are focused on expanding our margins and growing our non-wallboard portfolio of products in this business."

Commenting on the future of USG, Metcalf said that, "We made strides in all three phases of our 'Plan to Win' in the second quarter by strengthening our core operations, diversifying our earnings base and differentiating USG through innovation. The outlook for all of our businesses is bright."

US: Eagle Materials Inc has reported its financial results for its 2015 fiscal year that ended on 31 March 2015.

Earnings before interest and income taxes increased by 32% year-on-year to US$265m, reflecting improved sales volumes across nearly all business lines, with cement sales volumes setting an annual record of 4.8Mt. Net sales prices also strengthened across all businesses. Fourth quarter earnings before interest and income taxes increased by 31% to US$44.4m, as fourth quarter sales volumes improved across nearly all businesses, reflecting improving construction fundamentals in the US.

On 3 March 2015, Eagle entered into a definitive agreement with Holcim (US) to purchase its 600,000t/yr granulated ground blast furnace slag (GGBFS) plant in South Chicago. The purchase price of US$30m is subject to customary post-closing adjustments and will be funded from operating cashflow. The transaction is expected to close in the second quarter of its 2016 fiscal year and is conditioned upon the closing of the Lafarge-Holcim global merger.

Operating earnings from gypsum wallboard and paperboard grew by 28% year-on-year to US$177m in the 2015 financial year. Revenues from gypsum wallboard and paperboard grew by 13% year-on-year to US$525m. Gypsum wallboard and paperboard fourth quarter operating earnings grew by 32% year-on-year to US$38.3m. The increase in operating earnings was primarily due to higher net wallboard and paperboard sales prices and higher wallboard sales volumes. Gypsum wallboard and paperboard revenues for the fourth quarter grew by 5% year-on-year to US$112m. The average gypsum wallboard net sales price for the quarter grew by 4% year-on-year to US$168.97/Mft². Gypsum wallboard sales volumes grew by 5% year-on-year to 464Mft² in the fourth quarter.

US: USG's sales for the first quarter of 2015 have risen by 7% year-on-year to US$909m. The company's operating profit rose by 15% to US$76m in the same period. The positive results were driven by its gypsum and ceilings divisions.

"USG is off to a great start in 2015, led by the performance of our US Gypsum and US Ceilings businesses... We generated operating margin improvement in these businesses by achieving price increases, focusing on manufacturing cost control, and tailoring our spending on investments in these businesses," said James S Metcalf, Chairman, President, and CEO.

USG also announced that it has entered into agreements to sell the two ships in its non-core shipping business, Gypsum Transportation Limited (GTL), for US$42m. The sales of the ships are expected to close in April 2015.

Hungary: Saint-Gobain's Hungarian wallboard plant generated a revenue of Euro21.9m in 2014, according to Attila Piros, the managing director of the local Rigips unit. Saint-Gobain inaugurated the Euro30m wallboard plant, Hungary's first, in 2008. Since 2012, Rigips has boosted its use of capacity at the plant. In 2014, it used more than half of its installed production capacity.

Belgium: Etex Group has reported a 1.9% year-on-year drop in sales revenue to Euro3bn in 2014. Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell by 11.6% to Euro226m from Euro234m. It attributed the decline to a poor second half, which was hit by a slowdown in public and private investments, poor exchange rates in South America, slowing growth in emerging markets and recession-like conditions elsewhere.

In its outlook Etex anticipates that cyclic fluctuations will continue to appear in all of its markets throughout 2015. Emerging markets are expected to show minor growth, while the fundamental situation in Europe, and particularly in France, needs to improve further. "Overall results are expected to be stable", says Paul Van Oyen, CEO of Etex.

Bulgaria: Gips has reported that it made a consolidated loss of Euro2.1m in 2014 compared to the consolidated profit of Euro0.32m it declared in 2013. Consolidated revenue rose by 0.8% year-on-year in 2014 to Euro3.17m, Gips said in its latest financial statement. Natural gypsum producer Gips was set up in 1965.

France: Saint-Gobain aims to improve underlying operating profit in 2015 and save a further Euro400m. Saint-Gobain saw its 2014 operating profit rise by 1.6% to Euro2.8bn. On a like-for-like basis, the increase came to 7%.

"The group should benefit from good momentum in the US as well as in Asia and emerging countries in 2015," said Saint-Gobain in a statement. "In Western Europe, recovery will be held back by France."

Saint-Gobain derives about 66% of its sales from Europe and 25% from its home market in France. Total sales reached Euro41.1bn in 2014, down by 1.7%. Savings in 2014 reached Euro450m, as predicted in October 2014 when Saint-Gobain said that it aimed to do better than the Euro350m cost savings it had previously targeted for 2015. Saint-Gobain's net income, excluding depreciations and one-off charges, came to Euro1.1bn in 2014.