CSR announces 32%1  rise in half year net profit (pre significant items)2 , to $92.4 million

CSR Limited (CSR) reported a 32% increase in net profit after tax (pre significant items) to $92.4 million for the half year ended 30 September 2015.  After significant items (including transaction costs to complete the Boral CSR Bricks joint venture), net profit after tax was $77.6 million, up 13%.

The substantial lift in half-year net profit, driven by a significant increase in earnings from Building Products and Aluminium, has enabled the company to declare a 35% increase in the unfranked interim dividend to 11.5 cents per share.

Residential construction approvals continue to grow in both detached and multi-residential sectors with some states reaching record levels,” said CSR Managing Director Rob Sindel.

Given recent building approvals and financing data, as well as feedback from our major customers, we anticipate robust demand for our key products will continue over the medium term, bolstered by improving activity in the alterations and additions market.

CSR has also benefited from investment in new product development and targeted acquisitions while our efforts to improve operational efficiency over recent years has driven margin improvement across all businesses, Mr Sindel said. “The Boral CSR Bricks joint venture, now operating under the PGH brand, is performing well and the full benefits of the first phase of integration will be realised next financial year.

Our Hebel business is continuing to capture volume growth in multi-residential markets and market share in detached housing.

We are also encourgaged by growing demand for the AFS Rediwall® polymer-based permanent formwork solution with the new manufacturing facility located at Minto, NSW targeted for completion by the end of November 2015.

Aluminium EBIT was up 32%, with operational improvements and higher prices in Australian dollar terms, helping achieve increased margins.  

Looking at the outlook for the year ending 31 March 2016 (YEM16), CSR confirmed:

•  Building Products to deliver year-on-year earnings growth.  Given current construction data and longer lead times from approval to construction, CSR expects demand for its building products to remain at current levels for the medium term.

•  Viridian is expected to improve its earnings arising from stronger construction activity, market share gains and pricing initiatives.  Modest investment in the business will enhance Viridian’s capability.

• Aluminium sales volumes are expected to be around 3% higher than last year while approximately 70% of the net aluminium exposure for the second half of YEM16 is hedged at an average price of A$2,391 per tonne (excluding ingot premiums). 

•  Property earnings in the second half of YEM16 to be largely derived from settlements at the Chirnside Park, VIC residential development.  As a result, Property EBIT for YEM16 is expected to be between $20 to $25 million.