Sunstate Cement named best in Australia by Ruthven Institute for return on shareholder funds in the past 3 years

A Brisbane-based cement industry giant has topped the list of the nation’s 2000 biggest firms for generating the best results for stakeholders. See what other Queensland companies made the cut.

HARD STUFF

A giant in the Queensland cement industry has topped the list of the nation’s 2000 biggest firms for generating the best results for stakeholders.

Brisbane-based Sunstate Cement earned the gong on Thursday from Phil Ruthven and his market analysts at the Ruthven Institute, which found its after-tax “return on shareholder funds’’ amounted to 110 per cent over the three years to 2019.

That’s a whopping five times the 22 per cent which is considered world’s best practice and something achieved by only one in eight of our largest corporations.

Other Queensland companies, which comprised about 20 per cent of the top 100, include Domino’s Pizza, accommodation booking site Wotif, tech players Data #3 and Technology One, housing firms Tamawood and Coral Homes, as well as QIC and the Dalrymple Bay Coal Terminal.

Phil Ruthven from the Ruthven Institute.

To put his profitability survey in perspective, Ruthven noted that the 2000 largest enterprises that comprise his review accounted for nearly half of the nation’s revenue last year.

He found that Australia’s 2.4 million operating enterprises generated a net profit of $232bn, equating to a low 4.4 per cent return on $5.3 trillion in invested equity.

Nevertheless, that return is the highest Ruthven found in more than 30 years, a result largely attributed to record-low interest rates and reduced depreciation of assets.

“Unfortunately, that is as good as it will get for a few years,’’ Ruthven said, pointing to the hammer blow from the pandemic.

SWEET RETURNS

We had hoped to have a chat with Pete Edwards, who took on the job of general manager at Sunstate Cement last year, but he didn’t return a call seeking comment.

The company, launched in the early 1980s and based at the Port of Brisbane, is jointly owned by two of the country’s biggest cement manufacturers, Adelaide Brighton Cement and Boral Cement.

Peter Edwards, general manager of Sunstate Cement.

To learn a bit more, City Beat rustled up a copy of the firm’s most recently available annual report, which showed it generated a $22.6m net profit in the 2019 financial year based on $138m in revenue.

That was down somewhat from the prior year, which yielded a $25m net profit from $152m in turnover.

Yet the document shows that Sunstate was still able to serve up a sweet $1.50 per share dividend to the owners during the year, thus earning that top gong from Ruthven and his crew.

QUEENSLAND’S TOP PERFORMERS

Return on shareholder funds after tax (three years to 2019)

Sunstate Cement 110%

Olam Investments Australia 61.7%

Tamawood 58.6%

Dalrymple Bay Coal Terminal 52.3%

Wotif.com 51.7%

QIC 43.4%

Stanwell 39.4%

Technology One 36.5%

Data#3 35.2%

Domino’s Pizza 31.8%

Mitsui Coal 31.7%

Source: Ruthven Institute

FLOAT METRIC

There are no shortage of metrics demonstrating how COVID-19 has smashed the economy but we came across another telling indicator recently.

There were only 12 IPOs in the first six months of the year, about half the number in the same period in 2019, according to research by bean counting mob HLB Mann Judd.

Both are way down on the five-year average of 34 floats in the half-year, partner Marcus Ohm said.

Even worse, only $132m was generated by the dozen newly-listed companies which bravely ploughed ahead even as others put their plans on ice.

That paltry sum is dwarfed by the $828m over the same time window last year and the comparably astronomical $2.5bn that flowed in during 2018.

“It would appear that the COVID-19 pandemic had a significant impact on the IPO market,’’ Ohm concluded. Ya think??