(Wellington, Australia) -- Boral Ltd, Australia's biggest building materials firm, expects profit to rise through the next two financial years and is eyeing acquisition opportunities with its beefed-up balance sheet, its chief executive said.
A resilient Australian economy, a recovering US market and streamlined operations after a strategy review are expected to drive growth for the company.
"The US is the big problem child," Mr Selway said an interview, after the company booked a $91 million net loss in the year to June 2010.
"We're not going to see a large amount of improvement in the US until we see the housing market start to recover," he said.
Mr Selway expects rapid improvement in the US economy from 2011, but added: "if the US market doesn't recover, we're all in some serious trouble, it won't just be a Boral issue".
Analysts surveyed by Thomson Reuters I/B/E/S expect Boral to report a net profit of $179 million in the year to June 2011 and see it rising to $249 million in 2012 from a profit before one-off costs of $132 million in the year to June 2010.
"We've got an AGM coming up in early November and we'll give a trading update at that time, but we're reasonably comfortable with consensus and where its sits in [2011 and 2012] at this juncture," Mr Selway said.
Boral competes against New Zealand's Fletcher Building and CSR.
Mr Selway announced a shake-up of the business in July, the result of a review he conducted since taking over the top job in January 2010, with non-core businesses to be sold, while raising $490 million to boost its balance sheet.
Mr Selway said the company had diversified into too many sectors of the buildings materials business, and he wants to see the company focus on core markets of cement and construction materials in Australia, plasterboard in Australia and Asia, and bricks, roof tiles and masonry in Australia and the US.
Expansion through acquisition is something Boral was investigating, with the company looking at a range of options within Australia and overseas, Mr Selway said, but did not provide details.
Boral's balance sheet and gearing ratio at about 25 per cent would enable a "reasonable size" acquisition without needing to raise further funds, he said.
The current economic environment is a two-horse race, Mr Selway said, with Australia's relatively robust economy underpinning the company's performance and offsetting continued weakness in Boral's other key market, the US.
The car-loving Mr Selway returned to Australia to take up the helm at Boral after 20 years working in the US and UK. He is currently embroiled in a battle with Australian authorities to import his "dream car" from his former home in Scotland - an Aston Martin DB9 Volante which he reportedly bought for $171,000.
By Adrian Bathgate