The building sector boom is well and truly over, judging by the full 2018-19 results from CSR Ltd yesterday.
The company is now into ‘re-sizing’ its footprint and overheads mode – in other words hacking and slashing at costs, offices, staffing numbers, etc to cope with the continuing slide in demand from a contracting residential construction sector in particular.
And yet despite the slowdown, CSR is not asking shareholders to take some of the pain – final dividend has been trimmed to 13 cents a share, just as the interim was last November. The total is therefore 26 cents a share down from 27 cents.
CSR Limited has reported post-tax profit (before significant items) of $181.7 million for the year ending 31 March, at the lower end of guidance of between $180 million and $205 million. And more importantly down more than 13% from $210.6 million earned in 2017-18.
After significant items, the company’s statutory net profit after tax slumped 59% to $78 million owing to a $60.9 million loss from the sale of the Viridian Glass business in January this year.
In March CSR launched a $100 million share buy-back, but at $3.35 the shares are now lower than they were at the start of March.
CSR shares dipped 1.4% to 3.34 yesterday.
CSR said revenue from trading edged up 4% to $2.3 billion as sales to the sliding housing and construction sector slowed.
Earnings from continuing operations fell by 17% to $265 million in the year to March due to higher electricity costs in aluminum, That saw earnings from the aluminum division more than halve to $36.6 million down from $79.5 million last year.
CSR sold the troubled Viridian unit to Crescent Capital Partners in January for $155 million which has helped finance the current buyback.
The property division saw its share of earnings ease, delivering $38.8 million, down from $47.8 million in 2017-18.
CEO Rob Sindel (who is leaving soon) said the building products business performed well despite the residential construction market slowing.
“This reflects our increased exposure to the non-residential market where CSR has been positioning its investments in both innovative product solutions and growth-linked capex,” Mr. Sindel said in a release.
“[Building products] volumes in [April] remain consistent with the final quarter of [last financial year]. Mixed economic signals make it difficult to predict building activity levels for the year ahead,” CSR said yesterday.
“CSR is making changes to its operating footprint and overheads to mitigate the impact on earnings. Longer-term, demand for CSR’s building products will be supported by housing activity driven by population growth, high employment and a stable environment for interest rates.”
That’s business speak for hacking and slashing at costs and we should expect job losses at the company in coming months.
The company expects to name a new CEO prior to the annual meeting on June 26.
