The Boral Limited (ASX: BLD) share price closed Wednesday’s trade up 2.62%. The construction materials business may be in focus after the release of the federal budget last night.
Boral describes itself as the largest integrated construction materials company in Australia, producing and selling a broad range of construction materials including quarry products, cement, concrete, asphalt and recycled materials.
What was in the federal budget?
There were a number of measures announced to boost the economy and help people with the increased cost of living, such as a fuel excise cut.
But there was also an announcement of more spending on infrastructure projects.
The government said that it was committing an additional $17.9 billion to priority rail and road projects across Australia.
That included $3.1 billion for Melbourne Intermodal Terminals and related infrastructure, which aims to increase the efficiency and capacity of the national and Victorian freight industry.
The government also committed $3.7 billion for faster rail projects in New South Wales and Queensland.
Another budget item was $500 million for local councils to maintain and deliver priority road and community infrastructure projects.
There was a commitment of $678 million to seal 1,000km of roads on the Outback Way.
An amount of $880 million was committed for “roads of strategic importance”, $385.4 million for the Northern Australia roads program, and $150 million for the inland rail interface improvement program.
The government said it would provide another $5.4 billion to build the Hells Gates Dam, subject to the completion of the final stage of the business case. In total, it allocated $7.4 billion for 13 water infrastructure projects that aim to increase water security and build drought resilience.
In summary, many billions of dollars are being put towards infrastructure in Australia over the coming years.
What does this mean for Boral?
There was no mention of Boral in the federal budget, nor has the company issued an official update that may have impacted the Boral share price. But it does produce materials that will likely be used in these infrastructure projects.
However, in the company’s recent FY22 half-year result, it said that there was a strong pipeline of major transport projects and it is prioritising projects that complement its network.
Boral said that “the construction sector is aware of the challenges the significant infrastructure pipeline poses.”
The ASX share referred to Infrastructure Australia’s Infrastructure Market Capacity report from October 2021 which expects major infrastructure activity to double over the next three years, with New South Wales, Queensland and Victoria to account for 87% of spending. This is expected to lead to shortages in materials, skills and labour as peak demand occurs.
Boral expects delays on some projects to continue due to labour and supply chain constraints and cost inflation impacting the timeframe to execution. That’s why it is prioritising projects that don’t strain the existing network and enable it to deliver to customers.
Boral share price snapshot
After recent market movements, the Boral market capitalisation is now $3.8 billion, according to the ASX. Over the past month, Boral shares have fallen 2.5%.
The post Why did the Boral (ASX:BLD) share price have such a positive day? appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison 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 Bruce Jackson.
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