Log in
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 

MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  Boral Limited    BLD   AU000000BLD2


News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector news

Boral : CSR and Boral announce intention to form joint venture of Australian east coast brick operations

share with twitter share with LinkedIn share with facebook
share via e-mail
04/17/2014 | 05:29am EDT

4 April 2014

CSR and Boral announce intention to form joint venture of Australian east coast brick operations

CSR Limited (CSR) and Boral Limited (Boral) announced today that they propose to form a joint venture to combine their brick operations located on the east coast of Australia including operations in New South Wales, Victoria, Queensland, South Australia, Tasmania and the ACT.
CSR and Boral will approach the Australian Competition and Consumer Commission (ACCC) seeking clearance for the transaction. Completion of this transaction is subject to clearance by the ACCC.
The proposed joint venture will be owned 60% by CSR and 40% by Boral reflecting the relative valuation of the two businesses. There is no cash consideration as part of the proposed joint venture.
Brick demand in Australia has experienced a sustained structural decline, with bricks becoming an increasingly smaller component of the broader cladding market. Lower brick demand has resulted in declining capacity utilisation, reduced profitability, plant curtailments and closures.
The proposed transaction will enable both Boral and CSR to access additional operational and overhead efficiencies that would otherwise be unavailable to the parties acting independently.
With combined revenue in the order of $230 million, initial overhead savings of $7-$10 million per annum are expected following the formation of the joint venture and integration of the businesses. Longer term, consolidation of selected manufacturing sites will lower per unit costs of production and enable both companies to develop selected high value land assets without impacting product range and operational capability. It also positions the business to deliver returns that recover the cost of capital through building cycles.

Boral's CEO & Managing Director, Mike Kane said: "The Australian cladding industry has faced major changes in demand over the past 30 years resulting in a significant reduction in brick use. The reduced level of utilisation in our brick manufacturing plants coupled with high input costs has meant that brick production in Australia has been increasingly challenged.

"This joint venture is aimed at driving efficiencies across the combined network of operations and would provide a path for Boral to realise acceptable returns for our brick business and therefore secure our long-term commitment to the industry."

CSR's CEO & Managing Director, Rob Sindel added "This joint venture is about retaining manufacturing in Australia and maintaining clay bricks as a choice for consumers in a broader cladding market. It is about strengthening the opportunity for

employees and reinvesting in the industry while delivering satisfactory returns through the building cycle."

Page 1 of 3

BACKGROUND INFORMATION: The Australian cladding industry

Brick manufacturing is part of a broader cladding industry supplying residential and non- residential construction segments. Australian brick manufacturers have experienced a sustained structural downward trend in demand for brick products over the past 30 years.
Despite a general increase in construction activity over this period, total brick production in
Australia has fallen by 46% from its peak in 1981 due to a number of factors including:

A change in the dwelling mix away from detached houses (which are traditionally more brick intensive) towards multi-residential units and in particular high-rise construction which tends to favour use of alternative cladding materials compared to brick.

Changing construction methods, which have virtually eliminated double brick construction from detached houses on the east coast of Australia and substituted this with frame and cladding systems using single brick veneer as well as alternative cladding products.

Emerging trends in external façades in housing that are moving toward rendered walls and alternative cladding materials, including concrete panels, masonry blocks, fibre cement, metal products, timber and glass products.

This reduction in brick demand has impacted the brick industry as a whole and particularly Boral and CSR as declining capacity and reduced plant utilisation has resulted in plant closures and curtailments.
To date, the parties have sought to address these challenges through significant reductions in overhead and operating costs including closing and mothballing plants and entering into cross supply and purchase arrangements in various states.
Despite these actions the brick businesses fail to meet required profitability and overall return on capital employed measures.

Benefits of the proposed transaction

The proposed transaction will enable Boral and CSR to deliver a number of efficiencies that would be unavailable to the parties acting independently including:

Consolidate overhead costs including sales, administrative and marketing through a single management structure.

Develop more efficient freight and distribution networks, leveraging the location of the combined manufacturing footprint to improve service and reduce costs.

Potentially rationalise the number of sites in some states, particularly where sites have been mothballed while investing in other sites to improve operational and technical efficiency.

Allow redevelopment of certain land assets over time, without foregoing the ability to provide a similar product range and operational capability.

Cost synergies as a result of the formation of the joint venture are expected to position the combined business to recover the cost of capital over the longer term. This in turn will ensure the sustainability of the Boral and CSR bricks businesses.

Page 2 of 3

Proposed joint venture business

The combined business will have capacity of approximately 600 million bricks from 12 manufacturing operations across the east coast of Australia. There are no immediate plans to close any Boral or CSR operating sites following completion of the proposed joint venture.
The following land assets will be excluded from the joint venture, with these properties being leased to the joint venture:

Scoresby (Boral-owned)

Schofields (CSR-owned).

Boral will have an option to terminate the lease at Scoresby in 10 years, by providing three years notice. The Schofields site will be leased to the joint venture for five years.
Additional land not currently used for brick manufacturing operations at Bringelly (Boral owned) and Horsley Park and Oxley (both CSR owned) will be excluded from the
transaction and retained for development by the respective shareholders. All other sites will transfer to the joint venture.
Further details on the proposed commercial structure are expected to be disclosed following completion of the ACCC review process. Until that time, all Boral and CSR brick operations will continue operating as normal.

A joint-CEO conference call for investors will take place today at

11.00am (Australian Eastern Daylight Standard Time) Dial-in: 1800 098 754 Conference ID: 19786284

International dial in: +61 2 9338 7300; USA 1888 400 8039


Boral is a global building products and construction materials group, headquartered in Sydney, Australia. With leading positions in Australia, Asia and the USA, Boral produces and distributes a broad range of materials and products including quarry products, cement, fly ash, pre-mix concrete, asphalt, clay bricks, clay and concrete roof tiles, concrete masonry products, plasterboard & ceilings, and timber products. See www.boral.com.au for more information.


CSR Limited is a leading building products company in Australia and New Zealand which manufactures and supplies products including Gyprock™ plasterboard, Bradford™ insulation, PGH™ bricks and pavers, Monier™ rooftiles and Viridian™ glass. CSR is also a joint venture participant in the Tomago aluminium smelter, located near Newcastle, NSW. www.csr.com.au

Contact details:

Boral Limited CSR Limited

Kylie FitzGerald Andree Taylor

Group Communications & Investor Relations Director GM Investor Relations

Telephone: +61 2 9220 6591 or +61 401 895 894 +61 2 9235 8053 or +61 419 476 588 kylie.fitzgerald@boral.com.au ataylor@csr.com.au

Boral Limited ABN 13 008 421 761 CSR Limited ABN 90 000 001 276

Page 3 of 3

distributed by
share with twitter share with LinkedIn share with facebook
share via e-mail
Latest news on BORAL LIMITED
03/29BORAL : S&P Global Ratings Update
03/18BORAL : withdraws FY2020 earnings guidance due to COVID-19 and provides update o..
03/13BORAL LIMITED : Ex-dividend day for interim dividend
02/19BORAL : Results for the Half Year Ended 31 December 2019
02/12BORAL : Letters to Shareholders re Re-activation of DRP
02/09BORAL : shares plunge after bushfire profit hit, accounts probe
02/09BORAL : Update on Boral's North American Windows business
2019ASX STATEMENT : Boral's North American Windows business
2019WGN : Boral Cement Supply Agreement Update
2019BORAL LIMITED : Ex-dividend day for final dividend
More news
Financials (AUD)
Sales 2020 5 586 M
EBIT 2020 449 M
Net income 2020 204 M
Debt 2020 2 513 M
Yield 2020 6,89%
P/E ratio 2020 12,2x
P/E ratio 2021 9,43x
EV / Sales2020 0,94x
EV / Sales2021 0,92x
Capitalization 2 732 M
Duration : Period :
Boral Limited Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends BORAL LIMITED
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 9
Average target price 3,40  AUD
Last Close Price 2,33  AUD
Spread / Highest target 127%
Spread / Average Target 45,9%
Spread / Lowest Target -14,2%
EPS Revisions
Michael Kane Chief Executive Officer, Executive Director & MD
Wayne Manners President & CEO-Boral Australia
Kathryn J. Fagg Non-Executive Chairman
Ross Harper Group President-Operations
Rosaline Ng Chief Financial Officer
Sector and Competitors
1st jan.Capitalization (M$)
BORAL LIMITED-2.65%1 474
LAFARGEHOLCIM-36.09%22 521
CRH PLC-32.07%21 425