Boral Annual Profit to Fall on Currency, U.S. Housing (Update2)

By Tim Smith

Oct. 29 (Bloomberg) -- Boral Ltd., Australia's biggest seller of building materials, forecast profit to decline 15 percent as a strong local currency and weak U.S. housing market crimp earnings.

Forecasts for U.S. housing starts have been cut 30 percent for the current year, the Sydney-based company said today in a statement to the Australian Stock Exchange. A 15 percent fall will lower net profit to about A$253.3 million ($233 million) in the 12 months ending June 30, 2008, compared with A$298 million in fiscal 2007.

Boral forecast profit to decline a fourth consecutive year as the Australian dollar trades near a 23-year high and the U.S. housing market, which generates about 20 percent of sales, is mired in its worst slump in 16 years. Sales of previously owned U.S. homes tumbled 8 percent in September, the fewest since the National Association of Realtors began keeping records in 1999, indicating the worst housing slump since 1991 is deepening.

``We anticipate that U.S. housing starts could fall to 1.1 million in fiscal 2008, which is 30 percent below the prior year,'' Managing director Rod Pearse told the company's annual general meeting in Sydney. ``If this occurs and if the Australian dollar exchange rate remains at around 90 U.S. cents, Boral's profit after tax will be around 15 percent below last year.''

Shares of Boral fell 8 cents, or 1.2 percent, to A$6.74 at 10:37 a.m. in Sydney, extending this year's decline to 11.7 percent.

The Australian dollar climbed to a 23-year high of 92.15 U.S. cents today and is trading at 92.07 at 10:31 a.m. in Sydney.