Shareholders in Adelaide Brighton (ABC) will receive a small lift in interim dividend, and a much bigger surprise, a special four cents a share payout after reporting a modest 7.8% rise in net profit after tax for the six months to June 30.
But investors focused on the weak guidance for the full year – net after tax profit is forecast to be in the range of $190 to $200 million, including $7 million of property profits. That is down from the $207 million earned in 2015.
The shares sank nearly 7% at the opening before a small rebound saw them close at $5.25, off 4.2%.
The company yesterday told the ASX that interim dividend would rise half a cent to 8.5 cents, and the special dividend of 4.0 cents a share, both franked to 100%, would be paid for the June half year.
Statutory Net Profit After Tax, which includes property transactions, was $77.1 million for the period (down 6.7% because of fewer property sales), while excluding property transactions, the half year was $75.8 million, up 7.8% compared to the previous corresponding period.
Earnings Before Interest and Tax (EBIT) rose 6.6% to $110.6 million, reflecting what directors said was revenue and margin growth and stronger contribution from joint ventures.
Revenue rose 1.2% in the half to $686.0 million, with higher prices and strong demand in NSW, Victoria, Queensland and South Australia more than outweighed the effect of slowing demand in Western Australia and the Northern Territory.
The company said EBIT grew 6.6% to $110.6 million as EBIT margins expanded from 15.3% in the June, 2015 half, to 16.1% in June 30 2016 half year.
"Stronger earnings in lime, concrete products, concrete, aggregates and the joint ventures were positive for the Group’s EBIT margin. Energy costs, a focus for improvement, have overall across the Group declined in the first half of 2016 by $7 million. However, a temporary spike in South Australian electricity prices in July 2016 will impact second half 2016 results,” directors said.
“This is a pretty solid set of numbers, despite facing headwinds in several markets, which illustrate the benefits of our strategy to grow leading positions in a range of related markets and products, and to focus strongly on costs and returns,” Martin Brydon said in yesterday’s ASX filing.
Mr Brydon said that, for the 2016 full year, the Company expects sales volume of cement and clinker to be less than in 2015. Sales volumes of premixed concrete, aggregates, concrete products are expected to be significantly higher and lime volumes similar to the prior year. (That was a forecast also made at the AGM in May).
Prices rises are expected in a number of products in the second half, given strong demand and industry utilisation in several key markets.
“Our strategy is to ensure that the balance sheet is efficiently utilised while retaining the flexibility to fund long term growth, and, as always, Adelaide Brighton will look to participate in industry consolidation where it adds value for shareholders.
“We expect full year NPAT to be in the range of $190 million to $200 million, including an estimated $7 million net profit after tax from property transactions.
“We look forward to a solid finish to the year and to maintaining our practice of enhancing shareholder returns through improving business profitability and active capital management as we continue to realise the benefits of our long term growth strategy,” Mr Brydon said.