Shareholders in building products group CSR were told yesterday that the company remains positive about the coming year and again expects to benefit from the home building and apartment construction booms.
The company’s CEO Rob Sindel told shareholders at the AGM in Sydney that it is expecting housing starts to climb to record levels, with more than 200,000 expected in fiscal 2015-16.
“THE lead times from approval to construction means strong demand for our products should continue over the next few years,” he told the meeting in his address (http://www.csr.com.au/Investor-Centre-and-News/Documents/AGM%20Chairman%20and%20MD%20speeches%20July%202015.pdf)
Mr Sindel also said the turnaround of long troubled CSR’s Viridian glass business was tracking ahead of schedule, but its aluminium division was experiencing increased volatility in pricing and premiums.
Looking at housing he said “We believe building approvals for both detached and multi-residential housing will remain strong with detached housing up around 7% in the year to May 2015. Multi-res is up 22% over the same period.
"For this year this translates into a run rate of over 200,000 housing starts, which is at record levels. The lead times from approval to construction means strong demand for our products should continue over the next few years."
As to the recovery at Viridian, he said CSR is targeting new opportunities for revenue growth, particularly in residential performance windows and the commercial and architectural design markets.
"This will require modest levels of capital investment, which should be more than offset by improved market activity and growth in higher margin products,” Mr Sindel said.
"In Aluminium, as I mentioned earlier, we’ve seen increased volatility in pricing and premiums. This is no different than we have seen in the past and continues to be a function of our exposure to the global aluminium market
"In Property, earnings are always subject to timing but our range has been fairly consistent over the past few years.
"So the outlook for CSR is positive. We’ve had a few tailwinds which have helped our performance, but we’re delivering on our growth strategy by developing smarter and faster building solutions to improve the comfort and performance of homes and buildings,“ Mr Sindel told the meeting.
Earlier, CSR chairman Jeremy Sutcliffe told shareholders:
"We’re by no means complacent and remain mindful of the strong tailwinds we enjoyed via a buoyant housing market and a weaker Australian dollar. The recent decline in our share price (leaving global uncertainty aside) is primarily a consequence of declining aluminium prices and a reminder that, as shareholders, we are all taking a view on the future trend of global aluminium pricing.
"Aluminium remains a focus, given the volatility of global pricing, ingot premiums and exchange rates all of which remain beyond our control and have an enormous impact on earnings. Critical negotiations with AGL in relation to the Tomago power contract due to commence in November 2017 are also yet to be resolved,” he added.
CSR shares were up 2.8% yesterday on the ASX, closing at $3.60.
