Boral Limited

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Boral Limited

Level 20
Norwich House
6-10 O’Connell Street
Sydney, New South Wales 2000
Australia
(02) 232-8800
Fax: (02) 233-6605

Public Company
Incorporated: 1946 as Bitumen & Oil Refineries (Australia) Limited
Employees: 25,000
Sales: A$3.62 billion (US$2.86 billion)
Stock Exchanges: Sydney Wellington

Founded as an oil-refining company shortly after the conclusion of World War II, Boral later divorced itself from its initial interests, diversified into a wide range of resource and material fields, and is today one of Australia’s largest manufacturers of construction materials. During the 1980s and into the 1990s Boral expanded operations in the United States, the United Kingdom, and continental Europe. The company has a large network of subsidiaries, which in turn own dozens of companies whose interests include: quarrying, bricks, cement, concrete, clay, plaster, road surfacing, scaffolding, steel reinforcement, tire retreading, engineering, elevators, energy, and timber.

Boral, originally known as Bitumen & Oil Refineries (Australia) Limited, was incorporated in 1946. The new company was assisted financially by California Texas Oil Company, whose Australian subsidiary, Caltex, purchased 40% of the initial stock. Caltex also agreed to provide the new company with a 25-year supply of crude oil and technical assistance for three years. In return, Bitumen & Oil guaranteed Caltex a supply of refinery by-products.

An entrepreneurial promoter named David Craig became the company’s first chairman, and Elton Griffin was named chief executive. Griffin was an accountant by trade and maintained board positions with several other Australian companies, including the City Mutual Life Assurance Society and Email Limited.

T. G. Murray, another founding director, succeeded Craig as chairman in 1947. Murray also served as board chairman for the City Mutual Life Assurance Society, where Griffin was a director, and was a board member of other major Australian companies.

Bitumen & Oil stock, issued in early 1946, represented the 60% of the company that Caltex did not own. Initially the stock did well on the market as a result of widespread interest in the new corporation. The stock soon fell victim to nose-diving prices, before leveling off once production began in late 1948.

When production finally began, it was on Botany Bay, New South Wales, at a new plant on land in Matraville, leased from the Australian government. Despite difficulties in obtaining permission to construct the facility on the Botany Bay parcel, near Sydney, construction schedules stayed on course.

By 1949 Bitumen & Oil’s prospects were good. Chairman Murray told stockholders that year that increased government-sanctioned roadwork should benefit the company, though the cost of interstate transport and the limited supply of steel for drums could limit profits. The company closed out its first full year of production with a net profit of A$40,747.

Bitumen & Oil steadily increased production through the mid-1950s. In 1954 the company embarked on its first major expansion, and Queensland Oil Refineries—now known as Boral Resources (Queensland)—was founded. Activities of the new operation included processing semi-refined oil received from Matraville into heavy fuel oil and bitumen.

The company entered the field of petroleum tars that same year, with the purchase of a minority interest in Petroleum and Chemical Corporation, which provided an outlet for refinery by-products. The acquisition of a smaller company, W. B. Constructions, during this same time gave Bitumen & Oil a base for the manufacture and distribution of emulsion and tars in the states of New South Wales and Victoria.

Bitumen & Oil made a number of acquisitions during the early 1960s, which set the way for expansion in some areas and capital gains in others through the sale of new assets. In 1961 a controlling interest was purchased in Petroleum and Chemical Corporation. That same year Bitumen & Oil targeted Huddart Parker, a shipping group, for its first major takeover. Bitumen & Oil sold some of Huddart Parker’s assets shortly after the successful acquisition, but picked up bargaining power within the oil industry, having secured markets to store heavy fuel and diesel oil.

During this time the company also expanded bituminous operations in Victoria, with the formation of Reid Brothers & Carr Proprietary, an asphalt-manufacturing company owned jointly by Reids Quarries and Bitumen & Oil. Fowler Road Construction Proprietary was also purchased and has since become the spray division of Boral Resources (Victoria). Bituminous surfacing operations were then extended into South Australia through the purchase of an interest in Bitumax Proprietary, which later became a wholly owned subsidiary.

In 1963 Bitumen & Oil acquired Mt. Lyell Investments, primarily because of its large interest in the fertilizer industry. Mt. Lyell soon was sold, after plans to manufacture fertilizer from refinery by-products fell through due to unforeseen high costs.

Early in 1964 the Gas Supply Company was acquired, which included gas-manufacturing plants in Victoria, New South Wales, and Queensland. The Victorian operations were later sold. The Norman J Hurll Group was acquired later that year, and went on to form an integral part of the Bitumen & Oil subsidiary Gas Group. During this same time the company also purchased a majority interest in Mt. Lyell Mining and Railway, a tin-manufacturing company. Company officials later decided to abandon the tin field for the time, and the mining company was sold for capital gain.

A 1964 decision to diversify into construction resources was the highlight of the period marked by major acquisitions. This diversification marked the beginning of a shift in corporate focus. Two large quarry groups were purchased in 1964, paving the way for restructuring and ultimately representing two major building blocks in the formation of Boral as it is known today.

The two groups purchased—Albion and Reid—were consolidated under the name Albion Reid Proprietary, which later became the subsidiary Boral Resources (Victoria) Proprietary. Activities of smaller quarrying companies—including Carr Fowler, Reid Brothers & Carr, and Dammann Asphalt—were then incorporated into the interests of Albion Reid.

On November 19, 1963, the company adopted the name Boral Limited, which was an acronym for Bitumen & Oil Refineries (Australia) Limited. The new name signified the company’s move away from its original core business, oil refining. With the formation of the Albion Reid group, Boral had entered the premixed-concrete industry in South Australia. Operations were later expanded to included quarrying, and the subsidiary became known as Boral Resources (South Australia) Proprietary. In 1966 Boral acquired its third major quarry company, Bayview, rounding out the group that was then Boral’s foundation.

Boral’s acquisitions were put on hold for the next three years while company operations were consolidated. In April 1967 John O’Neill was named a company director and later that year was appointed chairman, following the retirement of T. G. Murray. O’Neill, a director of the City Mutual Life Assurance Society, brought a background to Boral that included the law, banking, oil exploration, and insurance.

Boral merged its oil interests with the French-based Total in 1969. Boral’s ultimate goals—to provide larger coverage of the retail petroleum market and acquire an assured crude oil supply—were not completely successful. In a major reorganization spanning the next two years, Boral sold its remaining oil interests to Total, and completely separated itself from its original field.

With oil refining behind it, Boral became increasingly committed to expansion in the building and construction industries. Early acquisitions spurred by this new direction included Warringah Brick in New South Wales, Brittains Bricks in Queensland, and Steel Mills Limited—now Boral Steel Limited—operating in New South Wales and Queensland.

Boral continued expansion into the brick field in the early 1970s, with the purchase of Glen Iris Bricks, now Boral Bricks (Victoria). Meanwhile, the company acquired a trio of concrete-masonry-block companies, including Besser Vibrapac of Queensland, Jaywoth Industries in New South Wales, and Hollostone, operating in Victoria and South Australia.

Boral also expanded into the field of gas and asphalt early in the decade with the acquisition of Brisbane Gas Company, which became Gas Corporation of Queensland, and asphalt operations from Esso.

In 1973 Elton Griffin retired as CEO and was succeeded by Eric J. Neal. Neal, a ten-year veteran of the company, had served in various managerial roles before replacing Griffin. The new CEO was quick to direct other diversification moves, and in 1975 Boral purchased Cyclone Company of Australia, which became Boral Cyclone. The acquisition, brought Boral into the fields of fencing, materials-handling equipment, prefabricated buildings, aluminum window frames and shower screens, wire screen cloth, and hand tools.

Peter Finley was named Boral’s fourth chairman in 1976. Finley, a chartered accountant, was, in 1990, vice chairman of the National Australia Bank and chairman of Email Limited, a company of which Elton Griffin had once been a board member.

In 1978 Boral Cyclone purchased the Melwire Group, whose operations include woven-wire conveyor belts, wire screens for heavy industry, and other woven-wire products. Melwire later acquired Mounts Wire Industries, a New Zealand company operating in the same fields. That same year Boral took over its first mining interest and a major Australian gypsum producer, Australian Gypsum Industries. The subsidiary Boral Bricks Proprietary also acquired Albury Brickworks and Pacific Brick Proprietary about the same time. Meanwhile, Boral was also establishing its presence in the United States, with the 1978 purchase of a partial interest in California Tile, a concrete-tile-manufacturing company based near Los Angeles.

Boral entered the 1980s joining a growing number of major Australian industrial suppliers diversifying into energy. Under an agreement with Esso Exploration and Production Australia, Boral began oil and gas exploration in Queensland’s Galiee Basin in 1980. A few years later Boral acquired a 37% stake in the Oil Company of Australia (OCA), a Queensland-based gas-exploration company. Subsequent purchase of additional interest in the oil company made OCA an 85%-owned subsidiary.

In 1982, the takeover of BMI Limited of Australia was completed, giving Boral full control over a major construction materials group. BMI’s interests were complimentary to those of Boral, and included operations in concrete, asphalt, and bricks, as well as timber, a new area for the company.

Expansion and diversification led to increasing sales, and by 1983 the company passed A$l billion in sales for the first time. The acquisition of the Augusta, Georgia-based Merry Group, the third-largest manufacturer of clay bricks in the United States, made Boral the fourth-largest brick manufacturer in the world. Once under Boral’s wing, the Merry Group went on to acquire brickworks in Maryland, Oklahoma, Texas, Virginia, and South Carolina.

In 1985 Boral purchased Johns Perry, an Australian company involved in heavy engineering, ropes and strappings, and lifts and escalators. The following year the Edenhall Group of the United Kingdom was acquired.

In order to safeguard its cement supply, Boral bought Blue Circle Southern Cement Limited, in 1987. The A$630 million acquisition was Boral’s costliest takeover ever. Blue Circle, Australia’s largest cement manufacturer, also has interests in coal and limestone. The purchase of Blue Circle and certain U.S. interests helped push Boral’s sales over A$2 billion in 1987: the company posted A$2.37 billion in sales, more than double 1983 sales.

Also in 1987, Eric Neal retired as CEO. Neal had played a key role in Boral’s expansion in the Pacific, the United States, and the United Kingdom. Neal was succeeded by Bruce R. Kean. Kean, who had joined Boral in 1968, had served as general manager of the company’s energy group and later headed up a number of building-products, manufacturing, and overseas operations. Kean picked up where Neal left off, continuing expansion drives in the United States and Australia. The new CEO also led Boral into continental Europe. Acquisitions there included two clay-brick and tile operations and a limestone and gravel processing plant in West Germany, as well as two Dutch brick manufacturers.

During the late 1980s a handful of Australian companies agreed to be bought out by Boral, which led to further expansion into the tool-manufacturing field. These acquisitions included the Bell quarrying concrete, asphalt, and tire business, based in Western Australia; Patience & Nicholson, a cutting-tool company; Trojan, a shovel and hand tool maker; the concrete-masonry-manufacturing company, Calsil Limited; and a window-manufacturing company, Dowell Australia Limited.

Acquisition activity also picked up in the United States in the late 1980s, where Boral acquired Fontana Asphalt, a major southern California asphalt supplier and quarry operator. Other U.S. acquisitions in the late 1980s included Blair Paving and Vernon Paving; another southern California asphalt manufacturer; and U.S. Tile Company, a clay-roofing-tile manufacturer.

Further expansion and acquisitions in Boral’s wide range of fields should continue through the 1990s. In an attempt to avoid large revenue fluctuations in the United States, the company planned to diversify away from its predominantly housing-related operations in southeastern and sunbelt states. The expanded U.K. operations—which are similar to Australian operations in housing and non-housing construction— were expected to remain at the mercy of high acquisition prices. In the Asia Pacific region, Boral continued to look for growth from its energy division, while at home revenues from Boral’s construction materials division were expected to continue to pace the company.

Boral entered the 1990s on a wave of rising revenues, having posted annual profit increases for 19 consecutive years. While better than 80% of its activities remain in its home country, Boral plans to work to increase profits from operations outside of Australia.

Principal Subsidiaries

Boral Resources Limited; Blue Circle Southern Cement Limited; Cyclone Scaffolding Pty Limited; Boral Concrete Products Pty Limited; Boral Australian Gypsum Limited; Boral Cyclone Limited; Boral Bricks Pty Limited; Boral Johns Perry Limited; Boral Gas Limited.