Why is the Boral share price sinking on Thursday?

A concerned man leans against a brick wall looking up at the skyA concerned man leans against a brick wall looking up at the sky

Shares in Boral Ltd (ASX: BLD) have sunk 4% into the red in today’s session and now rest at $3.15.

The downside brings losses for Boral to more than 48.5% this year to date and 54% in the last 12 months. Noteworthy is that prices took a plunge back in February after the Boral share price traded ex-dividend.

In broad market moves, the S&P/ASX 200 Materials Index (ASX: XMJ) has sunk more than 2% today but has been continuing in an uptrend since mid-May.

Nevertheless, the Boral share price has split away from the sector over the past month, as seen below, all while oil prices continue surging.

TradingView Chart

What’s up with the Boral share price?

Australian markets are trading down on Thursday as investors appear to be pricing in the recent upticks in oil and gas prices.

Oil, in particular, has surged this week, with the primary Brent Crude contract pacing to multi-year highs after a recent breakout.

“Oil prices have been pushed higher this year as economies recovered from the pandemic, while Russia’s invasion of Ukraine disrupted trade flows and caused further tightening,” Trading Economics says.

“China’s ongoing reopening after recent lockdowns also added to the buying pressure.”

Boral isn’t immune to the headwinds of cost inflation, and recent comments from its leadership agree the company was slow to pick up on the trends, according to The Australian.

Seven Group CEO Ryan Stokes said the company was reportedly caught “off guard”, adding that price increases weren’t enough to offset surging energy costs.

Back in May, the company advised that FY22 earnings have been “adversely impacted by extraordinary rainfall… and further increases in energy prices.”

Taking into account trading for late March through mid-May, which has been impacted by continuing
exceptional rainfall and inflationary cost pressures, the company now expects additional adverse impacts to underlying earnings in FY2022 of approximately $45 million.

Sellers are pushing the Boral price lower today, despite positive sentiment following the appointment of new CEO, Vik Bansal.

The post Why is the Boral share price sinking on Thursday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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