Widespread slowdown in residential construction hits CSR earnings

The slowdown in residential construction has hit the earnings of building materials producer CSR, with the company reporting its net profit from continuing operations down 20 per cent for the half year to $71.6 million.

But CSR said there were signs that housing activity would increase, citing improved house prices, increased credit availability and low-interest rates.

CSR chief executive Julie Coates: "There's more for us to do."Credit: Peter Rae

"I think there's been quite a lot of positive news from the developers around deposits on housing lots and that should flow through to us, but there's a lag," said CSR's chief executive Julie Coates.

"The use of our products in the building of houses comes later, so insulation, gyprock (plasterboard), bricks, they come later in the construction cycle," she said.

CSR said housing commencements across the industry were down an average of 19 per cent, with earnings before interest and tax (EBIT) at the company's building products division down a virtually identical 18 per cent to $95.9 million.

The company's bottom line profit actually rose 157 per cent to $68.8 million for the half year, although last year's first-half result was pushed lower by impairment charges relating to CSR's now sold Viridian Glass business.

We remain committed to continuing to diversify our earnings across both residential and commercial construction.

Julie Coates, chief executive of CSR

CSR finished the first half with a net cash position of $141.6 million, and will reward shareholders with a 10 cent interim dividend as well as a special dividend of four cents per share. The dividends will be 50 per cent franked, and paid on December 10.

Ms Coates said CSR had delivered a "solid result in the context of the subdued nature of the construction sector today".

"There's more for us to do, the team has done a good job through the first half but there's more for us to do into the second half and into next year."

Also on Friday CSR announced a major land sale - 20 hectares of surplus land at its Horsley Park brick manufacturing plant in Sydney for $140 million. CSR said the earnings from the sale would be split into two 10 hectare stages that would fall within the 2021 and 2023 financial years.

CSR says while housing construction is subdued, there are positive signs the sector will improve.Credit: Joe Armao

CSR is one of the country's biggest producers of building products such as plasterboard, insulation and bricks. It has about 40 manufacturing plants in Australia and New Zealand and owns a significant share of the Tomago aluminium smelter near Newcastle in NSW.

CSR shares closed up 4.6 per cent to $4.33.