Housing market 'has bottomed'

SYDNEY - Building and construction materials group Boral says the United States and Australian housing markets have bottomed but it is too early to predict when and how well they will recover.

Boral yesterday reported net profit for the year ended June 30, 2009, of A$142 million ($174 million), 42 per cent lower than A$243 million in the previous year.

Earnings before interest, tax, depreciation and amortisation (ebitda) dropped 22 per cent over the year, reflecting a significant deterioration in building and construction market activity in the US and Australia.

Second-half earnings were particularly affected.

Boral did not provide net profit guidance for 2009/10 but said a trading update would be provided at the company's annual meeting on October 28.

Chief executive Rod Pearse said both the Australian and US housing markets had reached the bottom of their severe downturn, but a recovery was not expected until after December.

"We think that the June half we've just been through ... is the bottom of this housing cycle in Australia," he said. "The question is what the shape of the recovery looks like in 2010 and 2011. [In the US] we expect that starts will remain at existing levels maybe for rest of the calendar year, and then will start to recover into the next calendar year, but it's a bit hard and early to call."

Boral also expects industrial and commercial building construction to be flat or down in fiscal 2010.

"This is quite an important segment to us as it is around 25 per cent of our concrete demand, and so we are seeing a lot of softening in that segment," Pearse said.

Boral reduced its number of full-time employees and contract labourers by 2460 in the year to June, an 11 per cent reduction.

Boral declared a final dividend of 5.5c, taking the annual total to 13c, down 62 per cent on last financial year.

- AAP