CSR half-year profit rebounds, to pay special dividend

CSR has shaken off weakness in building products to more than double half-year profit and declare a special dividend.

CSR's new CEO Julie Coates. Picture: Adam Yip

Building products supplier CSR expects it will take at least another year before the residential construction market resumes growth, despite a low interest rate environment and loosening of lending restrictions.

New CSR chief Julie Coates repeatedly described the housing market as “subdued” and doesn’t expect any immediate uptick in momentum despite the encouraging stimulus measures.

“I think we are looking at a 12-month lag,” Ms Coates told The Australian after delivering CSR’s interim results on Friday. “We’ve seen housing activity starting to be driven by population growth, high employment and low interest rates and positivity around access to credit. But we’re not seeing that come through yet.”

CSR closed up 19 cents at $4.33

Earnings before interest and tax for its building products division in the half to September 30 fell 18 per cent to $96m, as a steep slowdown in residential housing hit its performance, undermined by a 19 per cent drop in housing starts across the industry.

Net profit after tax dipped 20 per cent to $71.6m but net income jumped to $68.8m from $26.8m a year ago after the prior period was hit by impairment charges on its Viridian Glass business.

READ MORE: CSR’s new CEO

CSR delivered a special dividend of 4c a share in addition to an interim payout of 10c a share and continues with a $100m share buyback.

It expects net profit after tax for the 2020 financial year between $107m and $133m, representing the low and median ends of consensus analyst forecasts.

The company — which owns a stake in the Tomago aluminium smelter in NSW — said its aluminium unit recorded a 10 per cent increase in earnings to $25.4m, with input costs stabilising, offsetting dollar and currency movements.

Ms Coates hopes to see reforms helping ease high energy costs, encouraging the release of more land and fiscal reforms boosting the certainty of housing credit.

“The team has done a good job stabilising energy costs for the next few years, albeit at elevated levels to what we want and what we’ve experienced historically.”

CSR shares rose 4.59 per cent to $4.33.