There was a full basket of goodies for shareholders in yesterday’s full year figures for 2015 from building materials group Adelaide Brighton (ABC).
There was higher revenue, profits, dividends, including a special 4 cents a share payout, forecasts for higher sales and profits in 2016, and a big hint that the company will generate more than $100 million in extra income from selling off unwanted land over the next few years, which could mean more special dividends.
The company yesterday reported a 20.4% jump in full-year profit to $207.9 million, on a 5.6% rise in revenue to a record $1.4 billion.
Helping boost earnings faster than revenue was $34.9 million in profit from land sales – which helped finance the special dividend. Without the profit from land sales, net earnings were up a more sedate 5.1% at $174.3 million.
Overall dividend for 2015 will be 27 cents a share (including the 4 cents a share special payment), up from 17 cents.
The shares jumped 2% to $4.92, and then fell to end the day down 0.6% at $4.79. The shares are up more than 23% in the past year as investors realised the company would benefit from the continuing home building boom, especially on the east coast.
ABC 1Y – Adelaide Brighton posts record results
The shares however were only up 0.8% from the start of 2016 to Wednesday night, ahead of yesterday’s release.
“This is a very satisfying result,” according to CEO Martin Brydon.
“Our financial performance in 2015 has improved not just because of healthy market conditions but also due to the ongoing benefits of Adelaide Brighton’s strategy of operational improvement, growth in our lime business and vertical integration,” he said in yesterday’s statement from the company.
The company said that the strong residential construction activity in the east coast states boosted demand for its cement, clinker, concrete and aggregates products in those markets, offsetting continuing weakness in South Australia.
Looking to this year, Mr Brydon said the company expects sales volume of cement and clinker to be slightly higher in 2016.
"Sales volumes of premixed concrete, aggregates, concrete products and lime are also expected to increase,” he said yesterday.
"Prices rises are expected for all of Adelaide Brighton’s products in 2016 and increases are expected to exceed those achieved last year in cement, clinker, aggregates, concrete and concrete products. "Efficiency remains a key operational priority as part of the rolling program of cost reduction to sustain leading margins and shareholder returns.
"It is now estimated that remaining land parcels could realise in excess of $140 million in proceeds over the next decade and $30-40 million in the next two years.
"Adelaide Brighton, as always, will look to participate in industry consolidation where it adds value for shareholders. “Our business and our strategy are sound and we will strive to maintain attractive growth and returns to our shareholders while retaining a strong balance sheet,” he said.