CSR has warned of a “weak” outlook amid forecasts the Australian residential building market could take at least another year to recover from a five-year slump.
The building products, sugar and aluminium conglomerate last week reported a 51 per cent fall in first half-year profit to $32.9 million. Net profit after tax for the six months fell 1 per cent to $71.1 million; a downturn the company said reflected an increased cost in glass acquisitions.
CSR blamed its trouncing in part on having to book an extra $48 million in provisions to cover asbestos liability. The increase was caused by a fall in the dollar, thereby increasing the company’s potential liabilities to victims in the US.
But it was the floundering market that stymied any significant growth for the company. “The unprecedented volatility in markets presents a very challenging period across all our business, but particularly in building products,” managing director Jerry Maycock said.
The sweetener for the company has come from its sugar divisions, which have remained relatively stable. “The increased realised raw sugar price will modestly assist earnings this year,” Maycock said.
The company welcomed the federal government’s recent announcement to triple the first home buyers grant for new home purchases. It said this, with the lower interest rates, could act as a stimulus for activity in the distant future. However the benefits of these are more likely to be realised ?in the YEM10 financial year,” Maycock said. Despite profit being below market expectations, CSR shares rose 7c to $2.24, with dividends in line with the previous year.
