Archive | CSR Ltd

Three years of restructuring works for CSR

US building industry investments lift the group

CSR Ltd made a record $A505 million net profit after tax and before abnormals for the March year, up 7%. After abnormals, net profit rose 34% to $A634 million.

Ebit rose 15% to $A923 million on sales up marginally to $A6424 million. Sales from international building materials — CSR America Inc (CSRA), construction materials (Australia & Asia) and building materials (Australia, NZ, Asia) — rose 15%.

Managing director Peter Kirby said that after three years of portfolio restructuring, more than 75% of group ebit came from international building materials, and 56% from the US business. Total ebit from international building materials was $A702 million, up 17%. The ebitda margin increased from 17.9% to 19.3%.

Net debt doubled to $A2.1 billion, reflecting $A1.3 billion of US acquisitions and the $A462 million currency impact on the mainly $US-denominated debt. Gearing rose from 22.2% to 34%, interest cover fell from 9.1 to 6.8 times, operating cashflow fell 2% to just over $A1 billion, mainly due to higher tax payments, and free cashflow rose 4% to $A732 million. CSR spent $A402 million buying back 8.6% of its shares from last June and will buy back up to 10% in the next year.

Net tangible asset backing fell 11% to $A2.98/share, earnings/share rose 11% to A50.3% (basic before abnormals, 10% to A49.8c diluted), or by 39% after abnormals (to A63.2c basic, A62.5c diluted).

The company has talked to potential buyers of its founding business, sugar, and Mr Kirby said a forecast rise in sugar profitability should enable a spinoff or float.

Soft landing in US, tough year in Australia

The group plans to continue spending $US200 million/year expanding in the US.

“The US economy has so far proved remarkably resilient and most forecasters continue to project a soft landing. However housing activity is slowing, and despite the improved outlook for infrastructure spending, particularly in the southern states, CSRA is preparing for a tougher 12 months ahead.

“In Australia, this year will be difficult for both Building Materials and Construction Materials, but we believe the cycle has now bottomed.

“Housing activity will begin to pick up within the next few months, with starts forecast around 125-130,000 in the year to March 2002. The new $A14,000 new-home grant is working well and lower interest rates should assist recovery. Infrastructure spending should start to increase towards the end of the year, with a large number of
projects in the pipeline,” Mr Kirby said.

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