Boral will 'recognise that we need to bring more cash to the bottom line': Mike Kane.
NEW Boral chief executive Mike Kane said yesterday he would prioritise the reduction of the building product company's debt with ''belt-tightening'' and asset sales, while batting away investor concerns of an imminent equity raising.
Mr Kane, a 61-year-old American, was announced as Boral's new chief yesterday and immediately said he would not deviate from the turnaround strategy his predecessor, Mark Selway, was half-way through implementing before he was shown the door in May - which includes the sale of a range of non-core business assets and cost cuts.
''We're going to stick with the strategy, which I was a part of developing,'' Mr Kane told BusinessDay. ''What we have to do differently right now, is we have to have a really frank view of our balance sheet and our debt position and recognise that we need to bring more cash to the bottom line.
''Those steps need to be taken in the next 100 days.''
But Mr Kane said lacklustre market conditions were making it harder to sell the assets, which include the East Coast Masonry business and construction assets in the United States and Asia, at the prices Boral desired.
''We're not doing a fire sale, we're not just giving these assets away,'' he said. ''In some cases that will delay the sale of some of these businesses.''
Asked whether an equity raising was therefore on the cards, Mr Kane replied: ''Not at this time.
''Our view is that our bank covenants give us enough flexibility that in the next six months we can bring enough cash to the bottom line to relieve the pressure.''
Mr Kane headed up Boral's loss-making US operations since joining the group in early 2010, following stints at building materials suppliers Holcim, Pioneer USA and US Gypsum.
Boral's bottom line has been hit hard by generational lows in Australian and US housing construction, with the company forced to downgrade its profit forecasts three times last financial year.
Mr Kane oversaw a dramatic regime of plant closures and mothballing to bring down operating costs in the US, bringing the break-even point of the US operations down from 1.1 million to 950,000 housing starts - levels that Mr Kane said could be reached by next financial year.
Mr Kane, who will relocate to Sydney, will see his base salary more than triple to $1.6 million plus bonuses.
The appointment is considered a surprise, with internal rivals Mike Beardsell, the head of Boral's cement business, and construction materials boss Murray Read considered favourites.
But the appointment brings closure to the sudden departure of the previous chief executive, Mr Selway, which raised eyebrows among investors, particularly given the board had repeatedly endorsed the pervasive strategic changes the former motor industry executive had overseen.
Shares in Boral closed 3¢ lower at $3.42 yesterday.
