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  • Boral (BLD) has identified financial irregularities in its North American windows business
  • The irregularities involve misreporting of inventory levels and raw material, and labour costs at the company’s window plants.
  • This incident will affect its earnings before interest, taxes, depreciation and amortisation by between $29 million and $43 million
  • The company has hired forensic accountants to assist with the probe
  • Boral is down 6.71 per cent on the market today and is selling shares for $4.58 apiece

Boral (BLD) has identified financial irregularities in its North American windows business.

The irregularities involved misreporting of inventory levels, raw materials, and labour costs at the company’s window plants between September 2018 and October this year.

This incident will affect its earnings before interest, taxes, depreciation and amortisation by between $29 million and $43 million (USD$20 million to USD$30 million).

Australia’s biggest supplier of building materials is managing a private and confidential investigation. It has also hired forensic accountants to assist with the probe.

The company is expecting this to be a one-off, However, Boral will still determine if there will be a potential ongoing impact beyond October this year.

CEO Mike Kane says that the company is committed to thoroughly investigating the matter and will take the appropriate action.

“We are undertaking a comprehensive and urgent investigation of this matter to fully understand the events and what we need to do in order to address the problem,” Mike said.

“We have implemented immediate steps to bolster the management and controls within this business. Once we have all the facts, we will ensure that appropriate action is taken at all relevant levels,” he added.

Boral has already reviewed its management, operating procedures and internal control processes for its windows business. It said it will change the review as the investigation results become clear.

This incident has not changed Boral’s first half and full-year financial year 2020 guidance.

In November, at the company’s annual general meeting, Boral said it expects first-half earnings to fall 5 per cent due to a soft Australian housing market, infrastructure delays and unplanned production outages.

Boral is down 6.71 per cent on the market today and is selling shares for $4.58 apiece at 1:39 pm AEDT.

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