Gypsum industry news

Australia: A wet winter has delayed construction activity in key east coast markets as New South Wales experienced its wettest August in 16 years. Boral's CEO Mike Kane has told shareholders that more heavy rain could buffet earnings in its construction, materials and cement division during the rest of 2014 and 2015.

"Expectations could be dampened if we are unable to realise potential property sales and some level of price increase in this very competitive market and if we experience extended periods of adverse weather," said Kane. However, he added that Boral expected to more than double earnings in its building products division in 2014 and 2015, which made US$8m in earnings before interest and tax in the 2013 – 2014 financial year. Kane said that rising energy and labour costs remained a concern across the group.

Chairman Bob Every said that Boral expects a resources industry slowdown, particularly in Queensland. "We are expecting continued softening in roads and infrastructure activity for most of fiscal 2015 before a solid multi-year pick-up from fiscal year 2016," said Every.

"In our 2015 financial year we continue to expect ongoing strong results from construction materials and cement, improvements from both the building products and Boral USA divisions and improvements in the underlying USG Boral business," said Kane. "We anticipate return on funds employed to improve, despite the shift to equity accounting on Boral's 50% interest in the Gypsum joint venture." Boral made a net profit of US$173m in ist 2014 financial year, an improvement on a US$212m loss suffered during the previous financial year.

Every also announced his intention to stand down in 2016: "I was re-elected by shareholders at Boral's annual general meeting last year and at the time I intended that, if I was re-elected, that this would be my last term on the board. My intentions are unchanged. Therefore, I will not stand for re-election in 2016. I will work with the board to identify the best possible candidate for a successor for the role of chairman and I will help to ensure an orderly transition process."

US: Eagle Materials has reported its financial results for the second quarter of its 2015 fiscal year, which ended 30 September 2014. Second quarter earnings before interest and income taxes (EBIT) increased by 24% year-on-year to US$78.5m, as both second quarter sales volumes and sales prices improved in nearly all businesses.

As previously announced on 17 October 2014, Eagle entered into a definitive agreement to acquire CRS Proppants and its subsidiaries, including Great Northern Sand, an established supplier of high-quality northern white frac-sand to the energy industry. The cash purchase price of US$225m is subject to customary post-closing adjustments. The acquisition is expected to close during Eagle's third fiscal quarter, subject to receipt of required regulatory approvals.

Gypsum wallboard and paperboard reported second quarter operating earnings of US$45m, up by 22% from the same quarter of 2013. Improved wallboard net sales prices and increased wallboard and paperboard sales volumes were the primary drivers of the quarterly earnings increase. Wallboard and paperboard revenues for the second quarter totalled US$133m, an 11% increase from the same quarter of 2013. The revenue increase reflects higher average wallboard net sales prices and higher wallboard and paperboard sales volumes. Wallboard sales volumes for the quarter of 567Mft² are 2% higher than the same quarter of 2013.

Indonesia: Saint-Gobain has inaugurated its first wallboard plant in Indonesia, near Jakarta. With a production capacity of 30Mm², the new plant will enable Saint-Gobain to respond better to local demand and continue the group's growth on the rapidly-growing Indonesian wallboard market. Saint-Gobain has four other plants in south-east Asia, in Malaysia, Thailand and Vietnam.

India/Oman: UltraTech Cement Middle East Investments, a wholly owned subsidiary of India's UltraTech Cement, has acquired a majority stake (51%) in Omani gypsum mining firm Awam Minerals LLC.

Awam Minerals has a license to mine substantial gypsum deposits in the south of Oman. It's gypsum mining license will serve as a captive mine for the network of cement plants owned by UltraTech Cement in India, two grinding units and a cement plant in the UAE, as well as a grinding unit in Bahrain through its Middle East subsidiary.

US: USG has reported US$972m of sales for the third quarter of 2014, up by 5% from the same period in 2013. The company recorded a net loss of US$11m for the period, compared to a profit of US$23m in 2013. For the first nine months of 2014, sales were US$2.8m, a year-on-year increase of 4%. Profit grew by 82% to US$91m.

During the third quarter of 2014, USG reached an agreement in principle to settle all claims made in the direct and indirect purchaser class actions consolidated in the lawsuit, In re: Domestic Wallboard Antitrust Litigation, MDL No. 2437, pending in the United States District Court for the Eastern District of Pennsylvania. Pursuant to the agreement in principle to settle, which is subject to finalisation of a settlement agreement and court approval, USG will make a payment of US$48m. USG strongly denies any wrong-doing for the claims made in the lawsuits, but settled to avoid the expense, distraction and risk of further litigation. USG expects to make this cash payment within the next 12 months, while recording the US$48m charge in the third quarter of 2014.

"It is very disappointing to settle this lawsuit when we strongly believe we have done nothing wrong," said James Metcalf, president and CEO of USG. "However, we have to be realistic about the cost and risk a lawsuit like this creates for USG."