Diversified industrial group CSR Ltd is confident there’s a home building surge under way, judging by comments to shareholders at yesterday’s AGM in Sydney by MD Rob Sindel.
In his address Mr Sindel said the company, which produces a range of building products from bricks, to gyprock, glass and other materials, was looking for a "modest" improvement in housing starts in the year to March 2014.
He said CSR was expecting around 147,000 housing starts in that period (up from 145,000 starts), with growth in the two fastest growing markets – NSW and WA to be between 5% and 8%.
Mr Sindel said that housing approvals and finance data from the Australian Bureau of Statistics was already indicating growth (as we reported last week).
In his outlook commentary for the next year, he said the finance approvals for the construction of new homes is up 11%, with NSW seeing a rise of 15%, WA 26%, Queensland 8% and Victoria 4%.
New home sales so far this year are up 7% on last year and 26% from the low point reached in October 2012.
On approvals, he said detached house approvals in NSW are up 10% and in WA they are up 17%.
CSR 2013 Managing Director’s Presentation
"We are confident we are seeing the start of a sustained recovery in housing construction, particularly in the states with strong population and job growth," managing director Rob Sindel told the company’s annual general meeting (AGM) in Sydney on Thursday.
On the company’s troubled Viridian glass business, Mr Sindel was also optimistic, telling the meeting the company expects to see an improvement in the coming year.
The company took a $196 million impairment on the value of the Viridian business, but yesterday the AGM was told that the restructuring program was being rolled out and an "improved result is expected in the 2014 financial year".
Mr Sindel pointed out that there will be a depreciation benefit of "around $14 million following impairment and asset writedowns" at Viridian which will help the business’ result this year.
He said that CSR "retains a strong balance sheet" and is "significantly leveraged to any improvement in construction activity".
That also applies to any improvement in aluminium prices for its Tomago smelter where 40% of the company’s 2014 "net aluminium exposure" has been hedged.
CSR Chairman Jeremy Sutcliffe also told the meeting that the recent fall in the dollar will help this year.
"We’ve seen a significant correction in the value of the Australian dollar recently and that’s a positive for CSR as it is for Australian manufacturing as a whole," he said.
CSR shares rose 1.5% or 3.5c to $2.305 yesterday.
CSR 1Y – CSR sees the housing boom happening
