Boral is a key holding for Perennial Value, having bought it recently when it was out-of-favour at around $5.20. Boral delivered a sound 9% increase in underlying December half year earnings of $149 million. The interim dividend was also up a very healthy 9% to 12 cents per share, fully franked.

This result was driven by a number of factors including a good result in Australia despite a rain-affected first quarter, strong USG JV earnings growth (50% JV with USG, a US-based global manufacturer and supplier of plasterboard) and Boral USA benefiting from strengthening US housing activity. Domestically, the housing construction backlog and infrastructure activity are offsetting the fall in oil and gas construction activity.

Looking forward, the announced acquisition of US- based Headwaters is a significant turning point for Boral. It will bolster Boral’s exposure to US housing (annualised US housing starts in December 2016 of 1.2 million are still below the long-term average of 1.4 million) and infrastructure activity. This increased diversification comes at a time when Boral’s future US profits may increase at a greater rate than Australian profits.