Tag: CSR

Diversified industrial group CSR Ltd is confident there’s a home building surge under way, judging by comments to shareholders at yesterday’s AGM in Sydney by MD Rob Sindel.

It was a skinnier CSR that reported its full year profit yesterday.

Sliming conglomerate, CSR has reported a return to profit for the half year profit before significant items, but is now worried by the downturn in the Australian housing market.

Australia’s multi-billion dollar building sector is facing significant change at a time when it has started contracting because of the slowing pace of activity in the home building sector.

CSR has sidestepped a political touchy deal with a big Chinese food group and plumped for a Singaporean company as the buyer of its sugar and ethanol business for $1.75 billion.

At last an improvement in an annual result for CSR to boast about.

‘Thanks James Hardie’ might have been heard around the boardroom at CSR yesterday after the Federal Court stopped its $3 billion plan to split into two companies.

The break-up of CSR moved closer yesterday with the company revealing that it is now on track to happen as it moved to raise $375 million from shareholders in its second capital raising in a year.

No wonder CSR shares eased in yesterday's generally upbeat market.

Building materials and sugar company CSR reported disappointing profits for the six months to September 30, 2007 today, with a strong dollar and weak prices impacting the bottom line result.

Far from the mid-year slump forecast in March and April, sugar is on the way up.

It was an interesting AGM for CSR yesterday.

Building products and sugar group, CSR, would be on most lists of companies to be ‘hugged’ or ‘grabbed’ by a private equity group seeking an easy conquest.

Such is the company’s below par profit performance you have to wonder why that hasn’t happened.

Is it the fact that it operates in the highly political sugar industry in Queensland which would easily defeat any attempt by a financial buyer to get greater efficiencies and lower costs?

Or is its presence in the building industry and its continuing reliance on property development for a small but significant contribution to annual earnings that keeps the raiders at bay?

Certainly the involvement in aluminium isn’t of interest given there are pre-emptive rights and the metal output is heavily hedged which denies CSR the full benefit of strong world prices.

And now, thanks to lower results from sugar, a fall in property earnings and perhaps from building products, CSR is looking at a fall in 2008 earnings, after yesterday reporting a small drop for the 2007 year.

The shares fell by around 14c to $3.56, which is well under the $4 level when it was being touted as a buyout candidate late last year.

CSR said net profit was $273.3 million for the year to March 31, down from $305 million in fiscal 2006 and excluding significant items, the result was $240.5 million, a decline of 3.7 per cent.

The company said earnings before interest and tax (EBIT) was $406.1 million, down 2.6 per cent from $416.8 million.

All in all a ‘gentle decline’ and reflective of the company’s vague positioning and future prospects.

The new CEO, Jerry Maycock said in a statement accompanying the results that his early priorities for the coming year will be to assess further opportunities for growth, while focusing on a number of initiatives in each business to enhance performance and reduce costs.

“CSR has a great brand and an exciting future, albeit with shorter term challenges. At this early stage in the year, we expect the overall EBIT result is unlikely to reach last year,” Mr Maycock said.

(There was the bad news amid all the spin).

“The medium term outlook for our businesses is positive as we will begin to benefit from recent investments to improve performance and we have a number of interesting growth opportunities under review both in our current operations and by external acquisitions.”

CSR blamed the full year result on “external adverse market conditions for some of its businesses”.

Sugar profits rose with EBIT up 5.2 per cent to $130.1 million, despite interruptions to milling season caused by wet weather.

Wet weather reduced sugar production and yields and increased milling costs, offsetting some of the benefits of higher prices. But while sugar production will be higher this year, the emerging oversupply situation and volatile prices will push earnings lower.

Building products continued to be hurt by the ongoing slowdown in the residential housing market, particularly in New South Wales and while EBIT of $84.5 million was up from $80.9 million in 2006, that result was hurt by one-off costs of $20.6 million related to two plant closures.

US sugar futures hit their lowest level in 20 months in New York last week despite what seems to be apparently bullish news.