Review of results half year ended 30 September 2018
2 November 2018    

CSR announces half year net profit (before significant items) of $94.0 million

CSR Limited has reported a net profit after tax (before significant items) of $94.0 million for the half year ended 30 September 2018.

Earnings before interest and tax (EBIT)1 from its operating businesses in Building Products and Viridian of $123.6 million were up 1% compared to the prior half year.  Steady demand from the detached market and growth in commercial projects was offset by slower activity in high-rise apartment markets. 

CSR Group EBIT1 of $142.1 million was down 32% with good operational performance in Building Products and Viridian offset by the expected decline in earnings from Aluminium and the timing of Property profits which this year will be weighted to the second half of the year.

Statutory net profit after tax was $26.8 million which includes $67.2 million in significant items primarily relating to a non-cash impairment of the carrying value of the Viridian glass operations.

Commenting on the results, CSR Managing Director Rob Sindel said, “During the last few years, we have capitalised on the strength in the housing market and invested in our operations to ensure that our cost structure and operational footprint adapts to changing market conditions.

“We are also developing the next phase of growth initiatives.  Over 10% of our revenue is from new products and services that did not exist within the CSR portfolio five years ago.  This is continuing with $7 million invested in the last six months in a number of growth initiatives including the Inclose façade system and the CSR Connect digital customer platform.

“The $75 million expansion of Hebel capacity at Somersby, NSW is on track for completion in April 2019, and utilises world class technology which will deliver improved capability and operational efficiency.  We have also increased capacity in AFS Rediwall and recently purchased a new development site in Victoria to support market growth.  

“CSR’s strong balance sheet and financial performance has enabled the company to provide significant dividends to shareholders over the last few years with the interim dividend totalling $66 million (13.0 cents per share) with franking increased to 100% compared to 50% for the previous interim dividend.

“Our financial position remains robust with net debt of $68.5 million at the half year, up from $14.3 million as of 31 March 2018 following investment in the construction of the new Hebel plant.  We have also invested in several Property projects and expect greater returns from our enlarged property portfolio over the next several years.

“The proportion of earnings from Aluminium relative to our Building Products and Property businesses has now reset at a lower level following the new power contract which commenced in November 2017.  Based on current operating conditions and pricing, earnings are expected to be around $45 million for the full year.”

Viridian review

In July 2018, CSR confirmed that it was reviewing strategic alternatives in relation to the Viridian glass business. This review is materially progressed and the company expects to make a final decision by the end of this calendar year.  

While Viridian’s earnings have improved in the first half of the financial year, the performance remains below internal targets.  An assessment of the carrying value of Viridian has been performed in conjunction with the strategic review.  As a result, CSR has recognised a non-cash impairment, associated lease provisions and other costs of $75.9 million as a pre tax significant item.


Regarding the outlook for the remaining six months of the financial year ending 31 March 2019 (YEM19), CSR confirmed:

Building Products and Viridian – Despite moderation in demand from both multi-res and detached housing approvals, particularly in NSW, fundamentals for housing remain reasonably strong supported by population growth and a stable environment for employment and interest rates.

Demand for CSR’s products will also be bolstered by forecast growth in the non-residential markets.  CSR has a growing position in this market which represents about one quarter of revenue with a number of major projects in the pipeline.

Aluminium – Currently 75% of net aluminium exposure for 2H YEM19 is hedged at an average price of A$2,648 per tonne (excluding ingot premiums) as of 31 October 2018. Subject to current operating conditions and pricing, earnings are expected to be around $45 million for YEM19.

Property – Earnings of approximately $31 million from the sale of the 10-hectare surplus industrial site at Horsley Park, NSW are expected to be recorded in the second half of the year.  Construction of Stage 6 at Chirnside Park, VIC continues.  This will increase the expected Property EBIT for the full year to around $35-$40 million, subject to the timing of transactions.

CSR expects that group net profit after tax (before significant items) for YEM19 will be within the current range of analysts’ forecasts of $180 million to $205 million (before significant items).

1 All references are before significant items.  They are non-IFRS measures and are used internally by management to assess the performance of the business and have been extracted or derived from CSR’s financial statements for the half year ended 30 September 2018 (HY19).  All comparisons are to the half year ended 30 September 2017 (HY18) unless otherwise stated.


Media/analyst enquiries:
Andrée Taylor
CSR Limited Investor Relations
Tel:  +61 2 9235 8053