On the improve: Boral announced a final dividend of 8 cents per share. Photo: Ben Rushton
Building materials supplier Boral believes its prospects are improving as government infrastructure spending increases and industrial turmoil recedes.
"After reporting lower earnings for two years running, we have clearly turned the corner," Boral chief executive Mike Kane said.
Shares in Boral lifted on Wednesday after the company showed better than expected revenue, earnings and profit for the past financial year after a loss in the previous financial year.
Boral swung to an annual net profit after tax of $173 million in the financial year ended June 2014, bouncing back from a $212 million net loss in the financial year ended June 2013.
The company announced a final dividend of 8¢ a share, bringing the full-year dividend payment to 15¢ a share - up 36 per cent on the previous year.
The full-year result showed market conditions had improved across all of its divisions in Australia, the US and Asia - with the exception of Australian investment in roads, highways, subdivisions and bridges.
Three slated infrastructure projects Mr Kane highlighted as likely to boost Boral's bottom line from 2016 were the East West Link freeway in Melbourne, the WestConnex motorway in Sydney, and the proposed Badgerys Creek airport expansion - also in western Sydney.
Mr Kane said that overall he expects the Australian housing market to remain stable in the current financial year.
He expressed confidence in the American USG-Boral joint venture that will soon launch a new lightweight gypsum board - which has been very successful in the US - into 12 markets across Australia, Asia and the Middle East.
A review of Boral's timber business is underway. Mr Kane denied speculation it had already been decided to sell the division. He said it was valued about $100 million.
"Given the expected improvement in both the US and Australian housing markets, the stock has good prospects for earnings growth and is undervalued," said Merlon Capital Partners portfolio manager Adrian Lemme.
Pitcher Partners wealth management director David Lane took a similar view.
"With a strong exposure to the US, and an improving outlook for the Australian residential construction market, Boral provides a cyclical exposure to an improving sector," Mr Lane said.
He holds Boral shares on behalf of clients and in a personal capacity.