CSR announces half year net profit (pre significant items)¹ of $36.2 million up 92%
Statutory half year net profit of $46.1 million up 188%

• Trading revenue of $877.1 million up 2% for the six months ended 30 September 2013
  
• EBIT1 of $61.3 million up 60%
  - Building Products EBIT of $51.8 million up 19% with volumes largely steady with improvements in pricing, product mix and lower costs
  - Viridian EBIT loss of $10.6 million in line with management expectations. Restructuring initiatives on track with benefits weighted to second half
  - Aluminium EBIT of $24.2 million up 32% due to higher realised A$ aluminium prices (including hedging and premiums)
  - Property EBIT of $6.8 million up from $0.1 million
• Net profit¹ after tax of $36.2 million up 92%
• Statutory net profit attributable to shareholders of $46.1 million up 188%
• Earnings per share¹ 7.2 cents up from 3.7 cents
• Interim unfranked dividend of 5.0 cents represents a dividend payout ratio of 69% of net profit¹
  

CSR Limited (“CSR”) today reported a net profit after tax (pre significant items) of $36.2 million, for the six months ended 30 September 2013, up 92% on the prior corresponding half year. EBITDA of $100.0 million was up 21% reflecting higher earnings across all businesses.

Managing Director Rob Sindel said, “The increase in CSR’s earnings is driven by improved pricing and lower operating costs resulting from a number of restructuring initiatives completed over the last few years.

“The result was also boosted by higher realised aluminium prices and an increased contribution from Property.

“While underlying housing data suggests that some markets are recovering, we have yet to see a noticeable lift in sales volumes for our building products and glass businesses due to the recent growth weighted to the multi-residential sector, which has a longer lag time between building approvals and orders for CSR’s products.

“Nevertheless, we are optimistic that residential construction markets will continue to improve following steady growth in building approvals combined with the record low interest rates,” Mr Sindel said.

Outlook for the year ending 31 March 2014

Based on improved housing starts for the first two quarters of the financial year, CSR has increased its estimate for total housing starts in Australia (on a two quarter lag basis) to around 155,000 starts (~91,000 detached and ~64,000 multi-residential) for the full year ending 31 March 2014, a 5% increase from previously forecast.  The value of non-residential construction work done in Australia is expected to be down slightly on the previous year. 

In Building Products, earnings are typically higher in the first half of the year than the second half, due to a slowdown in construction activity during December and January. This should be partly mitigated by the higher volumes expected from the recent lift in housing activity. Overall, we expect Building Products full year EBIT to be higher than the previous year.

Viridian’s EBITDA should improve in the second half of the year compared to the first half as the financial benefits of recent restructuring initiatives are realised. Viridian is expected to be EBITDA positive on a run-rate basis exiting this financial year.

In Aluminium, GAF has approximately 52% of its net aluminium exposure hedged at A$2,213 per tonne. 

Property EBIT is expected to increase following the settlement of a series of transactions including the contribution of earnings from Chirnside Park, subject to timing of completion.  CSR retains a diverse property portfolio, the development of which is progressing on schedule.

CSR notes that the current analysts’ forecast range for CSR net profit after tax (pre significant items) is $51 million to $70 million for the year ending 31 March 2014.  Assuming no significant deterioration in construction volumes or in Australian dollar aluminium prices, CSR expects that group net profit after tax (pre significant items) will be towards the upper end of this range.