Why did the Boral share price have such a lousy month in March?

After tumbling 39% in February, the Boral Limited (ASX: BLD) share price continued to suffer through March.

Weighing it down last month was a taxation-related announcement and a guidance downgrade.

As of the end of March, the Boral share price was $3.46, 4.68% lower than it was at the end of February.

For context, the S&P/ASX 200 Index(ASX: XJO) gained 6.39% last month, indicating the Boral share price underperformed the index by 11%.

So, what impacted the building products and construction materials company’s stock in March? Let’s take a look.

Why did Boral’s stock struggle in March?

The Boral share price struggled last month, dragged lower by two price-sensitive announcements.

The first related to the company’s $3 billion capital return, announced in February.

The capital return saw investors receiving an unfranked 7-cent dividend and a $2.65 per share capital reduction. Hence, the stock tumbled 40% on its ex-dividend and ex-capital return date in February.

It didn’t stop there, though. After the market closed on 2 March, Boral released an anticipated update on the taxation of shareholders’ payouts.

The company said the Australian Taxation Office had published a class ruling concerning the capital return, as was expected.

The ruling confirmed no part of the capital return would be assessable as a dividend for tax purposes.

Shareholders were encouraged to seek professional advice on the tax implications of the payout.  

The Boral share price dipped 0.28% following the announcement. However, the worst was yet to come.

Boral’s stock tumbled when the company downgraded its earnings guidance on 22 March.

Devastating floods in parts of Queensland and New South Wales and rising fuel and coal prices dinted the company’s outlook for the financial year 2022.

It now expects its earnings before interest and tax (EBIT), excluding property, to be between $145 million and $155 million.

For context, Boral reported $78 million of EBIT excluding property for the first half of the financial year. It previously expected the second half to bring stronger earnings.

The floods are expected to dint its earnings by around $23 million.

Meanwhile, Boral’s exposure to coal prices is unhedged this half, while hedging is in place on its expected diesel usage until April.

Higher fuel prices have also worsened the company’s supply chain issues.

The Boral share price slipped 3.48% on the release of its guidance downgrade, hitting a new 52-week low of $3.21.

Boral share price snapshot

As of the end of March, the Boral share price was 44% lower than it was at the start of 2022.

Right now, it’s 39% lower than it was this time last year.

The post Why did the Boral share price have such a lousy month in March? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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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