Adbri (the onetime Adelaide and Brighton) says its first quarter 2023 earnings were “significantly above” the same quarter of 2022 as the company faced stronger demand from a number of sectors, even the depressed residential construction area.
The company’s annual meeting on Thursday was told by CEO Mark Irwin that it continues “to see strong demand for Adbri’s products across key segments, consistent with last year.”
“As a result of the combination of market forces and management initiatives, underlying Net Profit After Tax for the period ending April 2023 is significantly above January to April 2022, Irwin told shareholders.
Despite that improvement, there’s no guidance for the rest of the year from the company (nor any data for the improvement on the first quarter).
Irwin told the meeting that the company is facing “cost headwinds are expected to persist in 2023, particularly in the areas of energy.”
He added that “pleasingly as mentioned, we are seeing the positive impact of last year’s price increases, as well as further pricing gains in 2023 across most product lines as we maintain strong pricing discipline.
But while Adbri is happy with its YTD performance and trading conditions, according to the company, “general economic conditions do remain somewhat uncertain and as a result, we will not be providing forward guidance.”
He did say that so far this year AdBri has seen good signs.
“Demand from the mining sector for cement and lime continues to be strong and is anticipated to remain strong for the remainder of the year.
“The commercial and industrial, multi-residential and infrastructure sectors also continue to support strong demand for concrete and aggregates.”
He said there’s a “backlog of residential works, attributed to the shortage of labour and wet weather, continues to underpin good order books for the near future, however, the “outlook for the residential sector remains somewhat patchy in the medium term.”
“Pleasingly we have been awarded a contract to supply approximately 60,000 cubic metres of concrete to the M12 infrastructure project in Sydney, drawing on our vertically integrated business model.
“Our Masonry business has seen some softening in retail sales; however, demand remains strong on the back of a good pipeline of work in the commercial sector.
The company seems to have settled concerns about the huge cost overrun with its massive plant upgrade at Kwinana near Perth.
“As advised in April, the detailed review of the Project has been completed with the cost estimate revised to between $385 million – $420 million”, compared with the original forecast of $200 million (which was raised several times thanks to cost surges).
“This increase in project cost has been driven by a combination of external factors, including the escalating cost of construction, constraints on available labour and supply chain challenges.
“Furthermore, with the final design details of the purchased equipment being largely complete, structural and piping quantities have proven far greater than originally anticipated, further impacting on procurement and construction costs and hours.
“The project itself remains on track for target commissioning in Quarter 2 2024, with the plant expected to be ramping up and operational from Quarter 3. We have also strengthened our project delivery team, adding experience and capability.
“Whilst we are disappointed the cost is materially higher than initially forecast, the project continues to have a positive NPV and we remain confident it will support solid earnings over the long term,” the CEO told the meeting.
AdBri shares jumped 22% to $1.95 on Thursday.
