Ross Batstone
During the year, we completed the transition to our new plasterboard plant and
logistics centre in the Brisbane suburb of Pinkenba. This low operating cost facility
also has superb sustainability features and provides a great platform for growth.
We are focused on ensuring our costs elsewhere in the business continue
to be carefully managed and that we create sales through the development
of new products and lightweight building systems employing plasterboard.
With around 680 employees, the Plasterboard division is an integrated plasterboard manufacturing, distribution and installation business with 53 company-owned distribution and operating sites around Australia.

Boral specialises in the manufacture, distribution and installation of plasterboard-based wall and ceiling lining systems and aims to be Australia's leading supplier of wall and ceiling lining solutions. We have plasterboard manufacturing plants in Queensland, New South Wales and Victoria, a specialty plasters and jointing compounds plant in Victoria, cornice plants in New South Wales and Victoria, an integrated national network of 48 specialist trade centres and Australia's largest residential wall and ceiling installation service. Boral is a 50% shareholder in Gypsum Resources Australia (GRA) and in Rondo Building Systems, the leading metal products supplier for wall and ceiling lining systems.

Asia Joint Venture
Boral has a 50% shareholding of the Lafarge Boral Gypsum Asia (LBGA) JV, the leading multi-country plasterboard producer in Asia (outside Japan). Around one in every four square metres of plasterboard sold in this region comes from LBGA. The JV has 373 million m² of plasterboard capacity, specialist ceiling tile plants, a metal roll forming mill and production capacity for jointing compounds and industrial plasters, all feeding established distribution networks. Boral and Lafarge intend that LBGA continues to profitably grow its leadership position across Asia in a manner which substantially increases markets for plasterboard systems and associated products and delivers value.
Australian Bureau of Statistics data shows that Australian plasterboard production was steady year-on-year, at around 153 million square metres. Markets were resilient in Victoria and South Australia, weaker in Queensland and Western Australia, and new dwelling construction in New South Wales remained depressed. Australian sales revenue was down 1% to $371 million, despite a 3% lift in average selling prices. This reflected weaker sales volumes of plasterboard, cornice and jointing compounds which we manufacture and weaker sales of nonmanufactured products bought for resale through our extensive network of company owned and operated specialised trade stores.

Australian EBITDA was well down in the year despite only marginally weaker revenues. One-off costs associated with the transition from our Brisbane plant in Northgate to our new plasterboard plant at Pinkenba and its subsequent work-up to full operational performance contributed to the weaker EBITDA. Price increases and cost reductions largely offset cost inflation.

Markets in Asia have been impacted by the global economic recession but we remain very happy with our position and the ability of our Asian Plasterboard JV business, LBGA, to successfully manage operating margins whilst delivering key growth investments. Boral's equity accounted after tax profit of $13 million from LBGA was 26% below the same period last year. Sales volumes were down around 6% after the benefit of strong volumes in the September 2008 quarter was offset by weaker outcomes in the December 2008 and March 2009 quarters. Promisingly, sales volumes recovered in the June 2009 quarter and margins also strengthened in the second half as cost pressures dissipated and an aggressive cost reduction program was implemented.

During the year, new plants were commissioned in Chengdu (central west of China) and in Rajasthan (India). LBGA also announced construction of a new plant at Baoshan in China and gained FOI approval in Thailand to substantially lift capacity at its existing plant at Saraburi, near Bangkok.

For Plasterboard's safety and environmental outcomes for 2008/09 refer to Review of Operating Divisions - Plasterboard of Boral's 2009 Sustainability Report.

An uplift in new house construction buoyed by improvements in affordability and government stimulus spend is expected to favourably impact on future demand, particularly in Queensland and New South Wales. A recovery in non-residential markets looks further off, given continuing financing constraints. Market conditions in Korea, Thailand and Indonesia are expected to remain exposed to the global economic recession and associated shortage of project finance over the next year, despite stimulus programs initiated by several governments, notably China. However, strong underlying plasterboard demand is expected to underpin longer-term Asian returns.

Plasterboard Locations in Australia
LBGA is investing a total of US$48 million to purchase land and to construct a new plant at the Baoshan Industrial Zone in Shanghai, China. The new plant is expected to be in operation in the December 2009 quarter. Plasterboard production capacity will be 34 million m² p.a. initially with site flexibility to increase capacity in the future. The additional plant will strengthen LBGA's leading position in East China and position the business well to supply the growing market.
Our new "state of the art" plant at Pinkenba in Brisbane was completed in May 2008 and production at the Northgate plant ceased in September 2008. The new 40 million m² p.a. plant, Australia's largest plasterboard facility, is largely achieving efficiency goals, with key sustainability benefits. Natural gas used per tonne of plaster is more than 30% below that of our other plants and around 50% of water used to manufacture plasterboard was rain water harvested on site.
Plasterboard has significantly invested in an integrated approach to talent management and development, and was a winner in the Western Sydney 2009 Suncorp Awards for Business Excellence. National training development programs, involving over half our employees annually, include - "BEST" sales excellence, frontline distribution and manufacturing "cert III", BWell and "BILT" plastering traineeships. Sustained high levels of employee engagement and satisfaction, despite the economic downturn, has resulted.
We continue to focus on the development and release of new plasterboard products and accessories and lightweight building systems which, in the period, included BoxCote™ IntRwall™, an upgrade to our industry leading EurekaWall™ inter-tenancy system; systems for education and bushfire prone areas; ENVIRO™Plasterboard which is certified by GECA (Good Environmental Choice Australia); and Echostop® ceiling boards.
Plasterboard Operations