Boral, JB Hi-Fi and Aurizon costs drive inflation up


Construction material costs have already risen rapidly in Australia, with data provider CoreLogic’s Cordell Construction Cost Index for the December quarter showing domestic construction costs rose 7.3% in 2021, the rate the highest annual growth rate since the start of 2005.

The national average price for unleaded gasoline rose 5¢ to a record 176.9¢ per liter last week, the Australian Petroleum Institute said.

Boral’s Todorcevski said the price increases would be staggered across Boral’s building product line, but he declined to specify the magnitude of the increases.

“It will be a different increase in different markets,” he said.

He said this was mainly to counter rising energy costs as the price of coal had jumped, making it more expensive to operate plants such as its Berrima cement plant in New South Wales. Boral’s diesel fuel bill had also skyrocketed following the rise in oil prices.

Barrenjoey analyst Brook Campbell-Crawford has an “overweight” recommendation on the stock and a 12-month price target of $4.15 on Boral shares, which slid 7¢ on Monday to close at $3.72.

Boral is 70% owned by billionaire Kerry Stokes and his family through Seven Group Holdings after a takeover bid last year.

Aurizon’s Mr. Harding argued that Aurizon’s business will do “pretty well” as inflation rises because most of its contracts allow it to adjust prices quarterly as the index rises. consumer prices rose.

The RBA is being urged by some pundits to raise interest rates to stave off inflation, but the inflation rate has yet to accelerate as fast as some other countries.

In the United States, inflation hit a 40-year high in January after food, electricity and housing pushed the consumer price index higher than expected. Overall housing costs, which include everything from renting a primary residence to out-of-home accommodation, rose 0.3% in January, taking annual costs to 4.5%, the highest since 1991 .

Boral’s Todorcevski expects the single-family housing market to soften later in 2022 as the surge in construction activity prompted by the federal government’s HomeBuilder program launched in 2020 begins to slow. But the high-rise building market is showing signs of life. “I’m very, very optimistic about the arrival of a stronger multi-resolution pipeline.”

He said the long-awaited “infrastructure boom” is still proving elusive, while supply chain disruptions are also causing difficulties, making it more difficult to source replacement trucks and vehicles into the fleet of Borel.


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