February 12, 2014 / 12:36 AM / 4 years ago

UPDATE 1-Australia's Stockland, Boral lift earnings on housing recovery

* Stockland net profit up 5 pct; Boral profit up 73 pct

* Both lifted by improving housing market

* Australian home prices rise 10 pct over the past year

* Boral turns around building products arm (Recasts with Boral, adds comments on the housing market)

By Maggie Lu Yueyang

SYDNEY, Feb 12 (Reuters) - Australia’s second-largest property group Stockland Corp Ltd said first-half net profit grew 5 percent as the housing market gained momentum, putting the company on course to reach the upper end of its full-year earnings guidance.

Home prices across Australia’s major cities recorded a 10 percent rise over the past year and extended a strong run in January on the back of record-low interest rates, which also spurred a much-needed revival in home building.

Stockland said underlying profit in the half-year ended December rose to A$267 million ($241.14 million) from A$225 million a year ago, which was just shy of four analysts’ average forecasts of A$271.2 million, according to Reuters calculations.

Net profit rose to A$298 million from a reported loss of A$147.0 million a year earlier, which was due to asset impairment.

A recovery in construction activity also boosted building materials maker Boral Ltd‘s, which reported a 73 percent rise in its first-half profit.

Boral shares jumped 9.4 percent to A$5.46 at 0029 GMT, nearly a three-year high, while Stockland shares rose 2.3 percent after the results. The broader market edged up 0.4 percent.

Perpetual portfolio manager Vince Pezzullo said the property sector was reaping the benefits of a “genuine recovery” in the residential market.

“It’s not just prices (that are rising) but actual activity,” he said.

Stockland said a “significant improvement in residential” helped to overcome challenges in the retail and office markets. Residential operating profit jumped 39 percent in the first half.

“Our residential business capitalised on the improved housing market with a substantial uplift in sales,” chief executive Mark Steinert said in a statement.

Analysts are expecting Stockland to look at acquisition opportunities, particularly in the residential space due to its lack of exposure to the rapidly growing apartment segment.

Stockland said it expected to achieve the upper end of its earnings guidance for the 2014 fiscal year, and to grow earnings per share by 5 percent to 6 percent, assuming no material decline in the market.

Boral, meanwhile, said it expected performance across its businesses to improve in the second half through restructuring, together with the ongoing market recovery in the United States and improved housing activity in Australia.

Boral reported a 73 percent rise in profit before one-offs to A$90 million ($81 million) for the six months to Dec. 31, in line with its forecast on Jan. 28.

Its Australian building products reported a A$23 million turnaround in the first half, supported by the “tailwind of improving housing construction demand” in New South Wales and Western Australia.

“Markets in the U.S. are also continuing to strengthen, with losses from our Boral USA division down 23 percent in the first half and strong volume growth experienced across all of our U.S. businesses,” Boral chief executive Mike Kane said.

Boral also said it was on track to complete a joint venture with USG Corp to make plasterboard and ceilings by the end of February.

$1 = 1.1072 Australian dollars Editing by Stephen Coates

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