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  • Construction supplier Boral (BLD) has extended its debt facilities and worked on business streamlining measures to help navigate the virus crisis
  • Boral now has $1.3 billion in cash on hand and undrawn debt facilities — up from $1.14 billion at the end of the December quarter
  • Boral’s net debt has remained steady at around 31 per cent to the end of April, indicating a solid financial and operational base despite the global downturn
  • Wide measures have been enacted to streamline operations, including staff reductions, plant closures and lowered production volumes
  • Given global revenues have fallen between five and 20 per cent, an EBITDA reduction of only 3.5 per cent indicates Boral is navigating the crisis well
  • Boral is down 3.5 per cent, with shares trading for $2.48

Construction supplier Boral (BLD) has extended its debt facilities and worked on business streamlining measures to help navigate the virus crisis.

Liquidity key

Boral has moved to increase its liquidity to guarantee funding facilities for years to come.

The company has increased and extended debt finance facilities to provide a cushion against potential long term impacts of the economic downturn.

Boral now has $1.3 billion in cash on hand and undrawn debt facilities – up from $1.14 billion at the end of the December quarter.

The company has achieved this by moving a number of chess pieces around the board, including the issue of a US Private Placement (USPP) note of US$200 million, approvals for new bilateral two-year bank loan facilities totalling A$365 million, and approvals to extend US$665m of the company’s existing US$750 million debt facility from July 2021 to June 2024.

In the meantime, Boral has also repaid CHF150 million of Swiss Notes in February, as well as US$76 million of USPP notes in April.

Importantly, given the pandemic crisis, Boral’s net debt has remained steady at around 31 per cent to the end of April.

The fact the company has managed to maintain this debt ratio throughout the downturn so far indicates its management strategies to mitigate the pandemic impacts have been largely fruitful.

COVID-19 response

Overall, revenues are down in most of Boral’s businesses from January to April compared to the previous corresponding period (pcp).

EBITDA margins for the period are tracking around 3 to 5 per cent lower than those of the first half of the financial year across Boral’s divisions.

No part of Boral’s business has survived unscathed, with production volumes and revenues affected across Boral Australia, Boral North America and USG Boral in the Asia-Pacific region.

While each region (and even individual states within countries within regions) has been affected uniquely by the virus, Boral says it has remained pro-active in targeting efficiencies across its businesses to mitigate the pandemic impacts.

Depending on local needs, wide measures have been enacted including the furlough of workers, reductions to production volumes, and plant closures, to name a few.

Revenues in North America and Australia have fallen by five and six per cent respectively, while USG Boral has taken a roughly 20 per cent hit.

The aforementioned EBITDA reduction of approximately 3.5 per cent indicates Boral’s streamlining has been mostly effective in mitigating the challenges related to COVID-19.

Outlook

With the enhanced liquidity and new efficiencies brought in across Boral’s portfolio, the future is looking relatively solid given global conditions.

The construction industry has been widely deemed an essential service, so there is ongoing demand for Boral’s products, even if at reduced rates.

Mike Kane, Boral CEO & Managing Director, says the company is now well-placed to navigate the troubled times.

“The impacts of COVID-19 measures on our people and our markets have been significant and will be for some time,” he said.

“We have taken early actions and we are continuing to respond to changes, including aligning production and cost structures with demand.”

CEO & Managing Director Mike Kane

“We have increased Boral’s liquidity and extended our debt maturity. Together with careful management to preserve cash, we have further bolstered Boral’s liquidity position, and our balance sheet remains robust,” he added.

It seems the company has an innate understanding of the importance of strong foundations.

Boral is down 3.5 per cent, with shares trading for $2.48 as at 12:25 pm AEST.

BLD by the numbers
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