CSR withstanding the coronavirus downturn

CSR CEO Julie Coates. Picture: Adam Yip

The market was priced for doomsday for CSR, but in the end its annual result delivered something well short of that and its stock price jumped 11.5 per cent to $3.77 a share.

The increase in the stock price came despite the fact no second dividend was paid as the company bunkers down for a tough year ahead.

Being bad is okay if its less worse than the market was expecting.

The result release today covers the COVID-19 downturn, but the building products company is a lagging indicator with work being done of investment decisions dating back to the start of the year.

This means the worst is still to come.

Chief Julie Coates said the six weeks of the year was down some 3 per cent, which once again wasn’t good, but wasn’t nearly as bad as the market feared.

Coates has been in the job for eight months, learning to bake bricks after three years baking bread at Goodman Fielder and today’s results showed she is performing well in the face of tough conditions.

This might have been a company which joined the investment banking bonanza by raising discounted equity but to her credit Coates resisted and this too helped boost the stock price, in part because shareholders won’t suffer the dilution faced by Incitec Pivot et al.

CSR starts the year with net cash of $95 million and an extra $200 million in debt facilities.

In the last half Coates has made key changes like combining the Bradford insulation business with Monier roof tiles, cut a Queensland brick plant and completed an upgrade of the Hebel plant in Somersby while also boosting Hebel’s market share in Victoria to offset the downturn in NSW high-rise building.

Building product revenue was down 6 per cent in a market which fell 21 per cent so CSR is looking comparatively good.

None of this says the result was great, but in all the circumstances it was good.