Boral sells Indonesian business for $128m

1 Feb 2012, 11:40 am   -   Source: AAP
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Building materials producer Boral has sold its Indonesian business for $128 million and has confirmed previous expectations for half year profit.

Building materials maker Boral has sold its Indonesian business for $US135 million ($A127.87 million) and confirmed its previous expectations for its half-year profit.

Boral has been looking to offload what it deems its non-core assets, and on Wednesday said it had finalised an agreement to sell its Indonesian construction materials business to Siam Cement Group.

The Indonesian business generated revenue of $US150 million ($A141.72 million) in fiscal 2011.

Completion of the sale is expected before the end of the 2011/12 financial year, and Boral says it intends to use the proceeds to reduce debt.

"The sale of the Indonesian construction materials business is in line with our strategy to re-align the product portfolio to focus on core businesses where we hold leading market positions," chief executive Mark Selway said in a statement.

UBS analyst David Leitch said he thought Boral had reached a good sale price on the deal.

"We think it was a good year for earnings in Indonesia last year, so this year will be worse, in our opinion," Mr Leitch said.

He said the sale should not have a major impact on Boral's profits in the coming period.

"The interest savings will approximate a change in earnings before interest and tax."

Boral said it still expected its financial result for the six months to December 31 to be similar to the six months to June 30, 2011.

Profit after tax is expected to be in the range of $A65 million to $A75 million, before significant items.

The result is due to be announced on February 28.

Boral shares were down seven cents, or 1.7 per cent, at $3.97 at 1115 AEDT on Wednesday.

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