It was nice of CSR Ltd to tell those shareholders who had bothered to buy and read The Australian Financial Review, that the proposed split of the company would a while in coming and there wouldn’t be an announcement at yesterday’s annual meeting in Sydney.
The company’s CEO, Jerry Maycock revealed the longer than expected timeline for the de-merger in an interview with the AFR.
Not all shareholders would have bought the paper, but on the other hand, warming up the crowd ahead of the performance, was also a way of informing shareholders in other states that the biggest event in recent years for them was still some way off.
In fact it will be a couple of months before shareholders find out what the proposed splitting of the company means.
So no update on the structure and demerger was given to shareholders at the meeting, with Mr Maycock saying there was still a lot of work ahead of the board.
All we know that it will be a sugar arm, and a building products arm.
And that it is planned the demerger will be completed by March 2010.
In the meantime, apart from the sparring at the AGM with 5% shareholder, GPG, shareholders heard that 2010 underlying earnings could be slightly higher than last year, despite difficult market conditions for its products.
CSR said its forecast for annual earnings before interest and tax (EBIT) assumed similar earnings outcomes for its building product and property units.
"On current assumptions, we believe there is a reasonable prospect that group EBIT (pre-significant items) will be slightly higher than last year," Mr Maycock told shareholders yesterday.
Mr Maycock said while market conditions in the first half of fiscal 2010 remained challenging CSR was operating well within its banking covenants over its $1.2 billion of debt (How that will be apportioned between the two new groups of the company, will be one of the key decisions for the board to make and will influence valuations
"Assuming no substantial change to current market conditions, expect similar earnings in building products and property," he said.
He said there were early signs of an improving landscape for the company.
"Growth in sugar earnings (are) expected to outweigh slightly lower aluminium earnings."
World sugar prices have been at the highest level for three years or more on fears of a shortfall from India
CSR in May reported a 17 % drop in fiscal 2009 EBIT to $320.1 million, as weak building and commercial property markets and a significant fall in the price of aluminium hit hard.
Mr Maycock outlined the major points being worked on regarding the management included:
Determination of the appropriate capital structure for the two companies
- Legal, tax and operational mechanics for separating the businesses
- Due diligence to confirm adequate provisions for CSR’s asbestos and any other contingent liabilities
- Finalisation of board and management of two companies
- Determination of brand strategy
- Progress towards regulatory and statutory approvals.
- CSR shares rose 8.5 cents or 5.6% yesterday to $1.605
