Building products supplier CSR defies headwinds to deliver 85% net profit surge

CSR has reported a $270m annual net profit despite supply chain constraints, labour shortages and other trade capacity limits in the building sector.

Julie Coates is the CEO of CSR Limited.

Building products supplier CSR has defied headwinds buffeting the property sector to deliver an 85 per cent surge in annual net profit.

The company announced Wednesday that it had generated a statutory net profit of $270.6m in the 12 months to March 31, up from the $146.1m earned in the same period a year earlier.

Based on the continued strength of the detached housing sector, it also provided a rosy forecast for the year ahead for its products, which include PGH bricks, Monier roofing, Gyprock plasterboard and Bradford insulation.

“All of CSR‘s businesses have performed very well during the year. In Building Products, our team worked hard to support the demand in residential housing with strong operational execution,” chief executive and managing director Julie Coates said.

CSR chief executive Julie Coates

“We will continue to implement our strategy this year with increased investment at key sites to further improve productivity and optimise operations, as well as enhancing workplace safety and sustainability.’’

CSR noted that its result, based on a 9 per cent lift in revenue to $2.31bn, included significant items relating to the recognition of $86m in carry forward capital tax losses

Setting aside those significant items, the company saw its net profit spike by 20 per cent to $193m.

Earnings before interest and tax from CSR’s Building Products division rose by 24 per cent to a record $228m.

The company said the figures reflected “strong detached housing activity driving higher volumes, improved factory performance and operational execution and continued cost discipline across all businesses.’’

EBIT from the Aluminium division also gained ground, surging by 74 per cent to $40m as a result of higher aluminium pricing, although that was partly offset by increased production costs.

By contrast, EBIT in the Property division fell 13 per cent, from $54m to $47m, as a result of the sale of 4.6ha of land at Badgerys Creek and the next stage of a housing development at Horsley Park in Sydney.

“Investing in our Property assets and our development capability is also a core part of our results with contracted sales secured for all stages at Horsley Park to deliver $408m in proceeds over six years,’’ Ms Coates said.

“Remediation work is also progressing on the 196ha site at Badgerys Creek adjacent to the new Western Sydney Airport.’’

Shares in CSR enjoyed modest gains in early trade Wednesday, up 1.4 per cent to $5.77 by late morning.

Company directors declared a fully-franked final dividend of 18 cents per share, bringing the full-year payout to 31.5 cents.

That was at the top end of CSR‘s policy of returning between 60 per cent and 80 per cent of net profit after tax, excluding significant items.

In the year ahead, the company said it expected the strong pipeline of detached housing projects to continue.

But, at the same time, it cautioned that completion times may blow out as a result of supply chain constraints, labour shortages and other trade capacity limits impacting the wider industry.

CSR forecast Property EBIT of $52m in the current financial year based on factors such as the completion of the next tranche at Horsley Park and the $30m sale of a 41ha block of land at Warner, north of Brisbane.

It tipped earnings of $33m to $49m in the Aluminium division but warned that significant price and cost volatility will impact the final result.

Originally published as Building products supplier CSR defies headwinds to deliver 85% net profit surge