On-market buyback of up to 10% of ordinary shares

CSR Limited today announced a recordnet profit after tax (PAT) of A$472 million for the year ended 31 March 2000(YEM00).This was 34% higherthan for the same period last year.

Earnings before interest and tax(EBIT) rose 16% to A$804 million, from A$693 million last year.This was also a record for the CSRGroup.

All major financial measuresimproved, and the balance sheet was further strengthened by the A$960 millionin divestments announced since March 1998.Operating cashflow topped A$1 billion for the first time,up 15% to A$1,048 million.

The profit improvement was due mainlyto a strong performance from CSR operations, particularly CSR America (CSRA),which increased EBIT by 44% in US$, to US$210.8 million (A$327.8 million), ona 15% sales increase.Higheraverage exchange rates limited the increase in A$ EBIT to 37%.CSRA now accounts for 38% of CSRGroup assets.

EBIT from CSR’s aluminium operationswas also up sharply - a 46% lift to A$182.8 million - while BuildingMaterials reported another strong gain in earnings, with EBIT up 20%, toA$155 million, and profit margins above the previous cycle peak in 1995.

Profit after tax was boosted furtherby a one-off benefit of A$17 million due to the corporate tax change inAustralia.There was a furthertax benefit associated with divestments.

The result was achieved despite theloss of profits from divested businesses and a 15-year low in world sugarprices. CSR Sugar earnings fell 50% to A$45 million. Businesses sold in thetwo years to March 2000 previously contributed A$1.1 billion in sales andA$120 million EBIT per annum.

On a comparable basis, adjusting foracquisitions and divestments, CSR Group EBIT rose 23% to A$790 million.Comparable sales rose 5%.All businesses except CSR Sugarimproved both their profit margin and ROFE, with particularly strong resultsfrom CSRA and Building Materials.

Final dividend was unchanged at 12 cents perordinary share, franked and payable on 6th July.

Share buybackDirectors announced an on market buyback of up to 10%(103.7 million) of CSR ordinary shares. The shares will be repurchased over the next12 months.

CSR Managing Director Peter Kirby said:“The cashflow from operations and divestments allow the Group toundertake a share buyback, and at the same time pursue value-enhancing growththrough acquisitions in international building materials, particularly in theUS.The share buyback willbenefit earnings per share and reduce the Group’s cost of capital, and isexpected to have a positive impact on the share price. A buyback is a moretax effective way of lifting shareholder returns, compared to offering higherdividends, as any increase would be unfranked.”

Growth in international building materialsManaging Director Peter Kirby said the result was furtherevidence that the work to enhance shareholder value and improve theunderlying performance of CSR was beginning to take effect.

The Group’s core operations - thecombined international building materials businesses (CSRA, ConstructionMaterials and Building Materials) - reported a 24% lift in EBIT to A$600million.The combined EBITD Amargin was 18%, from 16.1%.ROFErose from 15% to 17.7%.

“The combined international constructionand building materials businesses are showing a solid improvement in theirperformance which goes beyond the cyclical benefits we have seen.This is also evident in thebenchmarking we have done which shows that we are improving faster than manyof our major competitors,” said Mr Kirby.

He said this competitive performance,together with CSR’s low gearing, strong cash flows and expected furtherdivestment proceeds, put the Group in a strong position to pursue furthergrowth.

“We have announced more than A$960million in divestments since March 1998.Over the same period, CSR America has spent around A$600million on expanding its operations, with acquisitions, new developments andupgrades,” said Mr Kirby.“Overall, these growth investments are performing on track.”

“CSRA is now in 29 U.S. states and iscontinuing to make bolt-on acquisitions across the country.We are also evaluating several majoracquisition opportunities.Providedthey can be secured at a price which is value-enhancing for shareholders, wewill pursue them vigorously.”

Mr Kirby said CSR would also pursueinvestment opportunities in Asia and Australia, provided they met theshareholder value criteria and performance measures for new capitalproposals.

Financial highlights

Shareholder value added (SVA) wasagain positive and continued to grow strongly.Around 68% of the Group’s business units are delivering positiveSVA.

Business performance

CSR America sales rose 10% in A$ toA$2,690 million.Adjusted foracquisitions and disposals, $US EBIT rose 36% and sales 12%.EBIT/sales margins rose to 12.2% from9.8%.Sales revenue, prices andEBIT margins were stronger in almost every business.

Building Materials (Australia, NZ and Asia) further improved its performance, with EBIT to sales margins of 16.7%,up from 15.7%in YEM99.Margins are 1% higher than theprevious cycle peak in 1995, although housing starts in YEM00, estimated at162,400, are 19,000 fewer than in YEM95.Building Materials Asia EBIT loss was A$6.8 million fromA$7.5 million last year.Excluding Asia, margins rose from 18.2% to 18.5%.

Construction Materials (Australia and Asia) EBIT was steady at A$117 million. ROFE improved to 14.4% from 12.9%, and EBIT margins rose to 11.2% from8.9%.

Construction Materials delivered astrong result from CSR Readymix concrete and quarries, and cement, with EBITup by 42% over the previous year.However, a significant fall in profit from the Humes structuralproducts division and higher losses in Asia pulled the overall resultback. Comparable EBIT -adjusted for the sale of contract mining, the Victorian waste business andvarious properties in 1999 - rose 20%. Construction Materials Asia lost A$4.8 million from A$0.6 million. Excluding Asia, EBIT margins rose from 9.3% to 12%.

The 46% increase in EBIT from CSR’s aluminium investments was due mainly to higher aluminium prices and a recordtonnage (157,000 tonnes) following last year’s 10% capacity expansion at theTomago smelter.CSR’s decisionin April 1999 to cease aluminium hedging, during negotiations on the possiblesale of the assets, heightened the impact of higher commodity prices and afavourable exchange rate in early 2000.

Sugar EBIT fell 50% to A$45.2million, from A$90.6 million previously, due to lower raw sugar prices.The refined sugar joint ventures,established in March 1998, are performing well and contributed A$23.2 millionto EBIT, compared with A$4.8 million last year.

CSR Timber Products EBIT rose 37% toA$57 million despite the sale of 38% of its portfolio early in the year.All of this business has now beendivested except for the FeaturPanels plant at Oberon, NSW.Sale negotiations are underway forthis business.

Outlook“In the US, strong demand for construction materials is continuing acrossCSRA’s operations,” said Mr Kirby.“Housing activity is declining, but the federal TEA-21 US$216 billiontransport infrastructure program is now starting to kick in and a new threeyear, US$40 billion airport spending program will further underpin anyslowdown in demand.

“Australian construction activity inthe non-housing sector is slowing, particularly major projects, but should benefitas various federal and state infrastructure projects start to roll out.Australian housing demand is stillvery strong, and this pace will continue past the introduction of the GST inJuly, but we are anticipating a post-GST slowdown as consumers adjust, laterthis calendar year.

“The less favourable economic outlookin Australia, the loss of profits from businesses divested during the yearand the various one-offs in the Group’s YEM00 PAT will make it difficult tomatch that result in the current year,” said Mr Kirby.“The operating shortfall fromdivestments should nonetheless be offset to an extent by stronger earningsfrom CSRA.Based on currentforecasts, CSR expects this year’s profit after tax to be ahead of YEM99 butbelow the result announced today.

“CSR ismaking progress in becoming a focused, high performing, internationalbuilding materials company.Ournext challenge is to grow successfully, by developing sustainable andprofitable growth opportunities," said Mr Kirby.“The combination of growth,competitive performance, and the premium placed on strong market positions asthe global industry consolidates should result in increased value for ourshareholders.”