Good news from two leading building industry players today, DuluxGroup (DLX) and CSR, with both companies providing upbeat outlooks for 2014.
CSR said in its half year release that it nearly doubled its profit in the six months to September 30 – and the shares reacted as investors chased stock, despite the general negative tone across the market.
CSR shares bolted more than 8% higher in yesterday’s big sell off after the company revealed a sharp rise in interim profit, and more to come.
They ended the day up 7.8% at $2.60, despite the 1.4% slide in the wider market which worsened in the afternoon.
CSR YTD – CSR rebounds with home building.
The driver was the company’s building products operation – but not glass which remains stuck in the red.
CSR said net profit surged to $36.2 million from $18.9 million, on revenue up 2% at $877.1 million for the half year.
Earnings Before Interest, Tax, Depreciation and Amortisation jumped 21% to $100 million for the half, a clear sign the company is on the way back and over the long and difficult period of fighting restructuring costs and weak prices and demand.
CSR said it expects the full year to March net profit will come in at the top end of the analysts’ range of forecasts of $51 million to $70 million, thanks in part to its view that housing starts for the year will run at around 155,000 units which is 5% ahead of its earlier forecast.
The company said its "underlying competitive positions improved with significant leverage to improvement in construction market activity" in the half and expects this to continue into the six months to March 2014.
In the September half, CSR said there was no improvement in underlying sales volumes, and the earnings uplift resulting from higher product prices and restructuring gains.
The company said that the pretax profit contribution from building products rose 19% to $51.8 million with a 32% rise in the contribution from the aluminium division to $24.2 million and $6.8 million contribution from its property unit.
The company’s Viridian glass unit was again a drag on earnings, (despite repeated restructuring) with a pretax loss of $10.6 million for the half which was "in line" with management expectations, CSR said.
The company will pay an interim dividend of 5c a share, up from the previous first half payout of 3c a share.
The higher dividend is a 69% payout ratio.
