Adelaide Brighton profit down, more falls ahead

Cement producer Adelaide Brighton says annual net profit fell 35pc and it expects 2020 profit to be down a further 10pc.

Trucks at an Adelaide Brighton cement operation.

Cement producer Adelaide Brighton saw its annual net profit fall 35 per cent after taking a hit from lower volumes and rising raw material costs.

It expects its 2020 profit to fall a further 10 per cent due to challenging construction markets.

Underlying net profit after tax for the December year fell to $123m from $191m a year earlier, at the lower end of $120m to $130m guidance given to the market in August.

Construction materials markets softened in NSW and Queensland due to an oversupply of apartments and falling consumer confidence, the company said.

“Whilst the short-term outlook remains subdued, we expect east coast demand to improve in 2021, with the benefit of stimulus from fiscal and monetary policy measures,” chief executive Nick Miller said.

It forecast 2020 net profit after tax will fall a further 10 per cent indicating a result of around $111m for the current year. A cost-cutting program will deliver more than $30m in gross savings this year.

Construction markets remain challenging due to bushfires over summer and extreme weather conditions since the start of the year while it is closely evaluating the potential impacts of the coronavirus that’s rattling markets around the world.

“In 2020 we expect competitive pressures to persist and construction materials markets to remain subdued,” Adelaide Brighton said on Wednesday.

A dividend of 5c a share will be paid to shareholders, down from last year’s 20c payout.