A tale of four builders


There has been a sharp divergence in the fortunes of the four major construction firms with two seeing positive returns and two losing more than 40% over the same period.
CSR, Boral, James Hardie and Adelaide Brighton all reported losses year to date, ranging from 21% for CSR to 36% for Boral.
Unlike many sectors, construction was able to weather the COVID-19 storm as the majority of sites have been allowed to remain open as ‘essential work’. But, on a seasonally-adjusted basis, building approvals fell 4% in March and the value of total buildings approved fell by 6.5%.
However, the bigger divergence was seen in one-year performance. Over one year to 1 May, 2020, James Hardie reported returns of 8% while CSR reported returns of 7%.
But for Adelaide Brighton and Boral, both firms reported losses of more than 40% with Adelaide Brighton losing 40% and Boral losing 41.7%.
Share price performance of CSR, James Hardie, Boral and Adelaide Brighton over one year to 1 May 2020
Boral was heavily skewed towards to the Australian property market and COVID-19 was impacting demand for its building materials. It was also subject to a class action for its US business. In an update to the Australian Securities Exchange (ASX), the firm said demand was “substantially declining”.
“Demand is declining in most markets and is expected to continue to decline, particularly in residential construction markets where the pipeline of work is substantially reducing in all geographies,” it said.
“As a result, where we have sufficient inventory levels to supply customers, production curtailments are planned and are taking place, including shift reductions and temporary plant closures.”
Adelaide Brighton, which manufactures cement, reported full-year 2019 net profits were $47 million, down from $185 million for the same period a year previously. It had embarked on a cost-cutting program, it said, but still expected to see ‘cost headwinds’ in 2020. As a result, it withdrew its earning guidance for 2020.
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