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Boral lifts H1 profit guidance 48% to $52m

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SYDNEY, Jan 23 AAP

January 23 2013, 2:28PM

Building products maker Boral has upgraded its underlying first-half profit forecast after ramping up cost cuts and enjoying better trading conditions before Christmas.

A week after announcing 700 new job cuts, Boral announced it now expects its net profit for the six months to December 31, excluding one off items, to be about $52 million.

The figure marks a significant increase on its previous forecast of about $35 million, issued in November.

Boral has slashed costs by more than $100 million by cutting jobs and selling assets in Thailand to help stave off the effects of Australia's housing market slump and delays to major construction projects.

Boral said its improved forecast was based on the early benefits it had reaped from its restructure and better-than-expected trading conditions before Christmas.

"The improvement on Boral's previous guidance primarily reflects better than anticipated trading conditions in Australian construction materials underpinned by favourable weather conditions," Boral said in a statement on Wednesday.

But despite the profit upgrade, Boral shares remained flat. The stock was two cents lower at $4.86 at 1428 AEDT.

Bell Direct analyst Julia Bell said the stock had jumped 13 per cent since the announcement of its restructure on January 16, as investors punted on better earnings from Boral.

She also said as the first half of the 2013 financial year had already finished, investors were now focused on Boral's full year result.

"That market may be looking to the full year result rather than the half year result and most brokers have increased their target for the stock on the back of the cost cutting drive," she said.

Boral's restructure involved 1,000 job cuts during the current financial year, including the 700 redundancies from its Australian operations announced last week.

It expects while the redundancies will cost $60 million this financial year, they will lead to annual savings of $90 million.

Boral's earnings slumped 29 per cent last financial year.

By Kylie Williams