Australia's housing construction boom has helped Boral return to profit, but the building products maker isn't counting on further interest rate cuts to have a major impact on the property market.
Chief executive Mike Kane said cost-cutting and strong housing markets in Australia, Asia and the US helped offset losses from rainy weather and a lack of infrastructure building in Australia during the first half of the financial year.
Boral bounced back into the black with a net profit of $104.5 million, compared to a net loss of $26.3 million a year ago.
But revenue was down 20 per cent to $2.3 billion.
Boral's shares slipped seven cents to $5.79.
OptionsXpress market analyst Ben Le Brun said Boral's stock price had rallied in the lead up to the result but investors were likely disappointed that the company's return to profit had been driven by cost cutting rather than revenue growth.
He said Boral's shares were hovering around five-year highs, having rallied since late 2014 on expectations of a strong US housing recovery in 2015.
But growing speculation of a US rate hike in coming months threatened to slow that recovery down, giving investors cause for concern.
"It's all very much a US interest rate story," Mr Le Brun said.
"If they're talking about raising interest rates over there, then obviously the complexion for the housing story is maybe not as fundamentally strong as it has been previously."
Meanwhile, Mr Kane expects any more rate cuts by the Reserve Bank will have less impact on local housing construction than they have in the past.
"As further cuts happen in interest rates in Australia, it will not have as dramatic an impact as it has had in the past," he said.
"It will be more moderate.
"My experience in the US where interest rates were finally cut to the point where there was very little interest rate left, was that there is a point of diminishing returns as interest rates begin to approach zero."
Boral expects its medium and longer-term earnings growth will come from continued housing market strength in Australia, Asia and the US, while Australian infrastructure activity should start to pick up in the 2015/16 financial year.
Mr Kane said the company could expect future growth and superior returns after the competition watchdog recently approved the sale of Boral's Western Landfill business, as well as the merger of its brick business with CSR.
The CSR transaction should be completed within the first half of calendar 2015, with Boral reaping a 40 per cent share of the combined post-tax earnings.
BORAL SWINGS TO PROFIT
* Net profit of $104m, compared to net loss of $26m in 2013/14
* Revenue of $2.3b, down 20 per cent from $2.9b
* Fully-franked interim dividend of 8.5 cents, up from seven cents
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