Building products group CSR has confirmed the solid rebound reported in its in interim profit late last year in reporting an 82% jump in underlying full-year profit yesterday to $146.5 million, thanks to the surge in new home construction which boosted sales of bricks, glass and other products.
As a result, CSR declared a final dividend of 11.5c a share, up from 5c a share last year.
That took the total payout for the year to 20c a share, double the 2013-14 level.
Including significant items relating to CSR’s asbestos compensation liabilities, CSR’s net profit was $125.5 million.
“The hard work over the last few years to improve our customer service and the efficiency of our operations has strengthened CSR’s foundations and positioned us to increase returns as construction markets improve,” CSR Managing Director Rob Sindel said yesterday in the statement to the ASX.
“The fundamentals are in place. Our operations across all key businesses are now safer, more energy-efficient and have lower cost structures”.
Mr Sindel said that the company has been positioning itself to take advantage of the growing shift to apartment-living in Australia.
“Over the past 18 months, we have increased our exposure to multi-residential construction through acquisition and investment, and accelerated our investment in digital services for customers and in developing building systems which are smarter, faster, and easier to use,” he said yesterday.
CSR 2Y – CSR net profit up 82%
CSR is the maker of products such as Hebel concrete, Viridian glass and Gyprock plasterboard – all of which are in great demand in the current home and apartment building boom.
That saw group revenue jump a solid 16% to $2.02 billion for the year ended 31 March. The 812% jump in earnings tells us that higher volumes and greater efficiencies fattened the company’s profit margins during the year.
During the year total residential commencements increased 19% on the prior year to almost 195,000 new dwellings.
The company said lead indicators including building approvals show no sign of a slowdown in new home construction.
CSR’s struggling Viridian glass business earnings before interest and tax were $3.1 million compared with last year’s EBIT loss of $14.9 million.
"The business has returned to profitability and our turnaround is ahead of schedule," Mr Sindel said.
CSR also owns a stake in the Tomago aluminium smelter through its 70% ownership of Gove Aluminium Finance.
During the year, stronger aluminium prices and robust premiums for delivery of physical aluminium led to a doubling of aluminium EBIT to $104.3 million.
CSR said it has hedged 59% of its net sales at an average aluminium price of $2,311, excluding premiums, for the 2016 year.
Looking ahead CSR said it expects its 2015-16 results to benefit from initial overhead savings of $7 million to $10 million following the formation of the CSR and Boral brick-making joint venture on the east coast which officially commenced earlier this month.
These joint venture earnings will contribute to CSR’s Building Products group.
CSR shares jumped nearly 8% to close at $4.04.
