Review of Results - Half year ended 30 September 2020

CSR Limited announces half year net profit after tax of $58.7 million

Solid Building Products result for the half year ended 30 September 2020 (HY21)

Building Products
EBIT of $96.3 million up from $95.9 million, with EBIT margin increased to 12.1% from 11.4%. Strong cost control and operational efficiency offset the slowdown in residential construction activity which declined 7%.  
No significant Property earnings were recorded during the period, however a further sale of industrial land at Horsley Park, NSW was secured with $226 million in development sale proceeds expected over the next four years.
Aluminium EBIT of $6.2 million, down from $25.4 million, reflecting a significant decline in aluminium prices following the volatility due to COVID-19.  
Net profit after tax of $58.7 million, down 15% from $68.8 million in the prior comparable period.
Net profit after tax (before significant items) of $66.4 million, down 7% from $71.6 million in the prior comparable period.

Strong balance sheet with net cash position of $153 million

Cash preservation strategy drove strong cash flow during the half which strengthened the balance sheet to a net cash position of $153.1 million.   
Interim dividend of 8.5 cents per share (fully franked) declared.  Special dividend of 4.0 cents per share (fully franked) declared. The special dividend reflects visibility of first half operating environment, noting that no final dividend was declared for the year ended 31 March 2020.  

Increased diversification and strong cost control

Commenting on the result, CSR Managing Director & CEO Julie Coates said, 
“While it has been a challenging half on many fronts, we are very pleased with the performance of Building Products. The increasing diversification of our business across segments and markets, coupled with strong cost control and operational efficiency enabled us to maintain our Building Products EBIT in a contracting market. 
“We have also made good progress across a number of key strategic initiatives.  We secured the next phase of development at Horsley Park, with our property development pipeline set to unlock significant earnings over the coming years.  We have reorganised the business to drive a stronger customer solutions focus, started our supply chain transformation and continued to optimise our footprint.  
“We are building CSR into a more diversified, streamlined business to increase resilience as well as growth potential.”

Good progress on key strategic initiatives

During the half year, CSR progressed the development of key strategic initiatives for the business.
Leadership team and structure in place to support CSR strategy to make the business more diversified, streamlined and resilient.
Planned closure of PGH Bricks Horsley Park, NSW announced in October 2020 reflecting continued work on footprint optimisation to improve efficiency and fixed cost position. 
Supply chain transformation with initial projects scoping the opportunity on site master planning, group import strategy, shared fleet and a transport management system. 
Business reorganisation to drive a customer solutions focus, CSR group technical capability, product and market growth.

A detailed overview of CSR’s strategy will be provided at a strategy session which will be webcast on 12 November 2020.


Regarding the outlook for the year ending 31 March 2021 (YEM21), CSR noted:
Building Products - Revenue for the first four weeks of the second half of YEM21 is down 6% from the prior comparable period.  Changes in market activity from current levels will be closely monitored to ensure costs are contained and production is aligned to demand. The longer-term outlook remains uncertain as the impact of COVID-19 continues to influence macro factors like migration, as well as economic activity and employment levels.
Property - Delivery of the first tranche of the Horsley Park Stage 2 project is on track to deliver earnings of $53 million in the second half of YEM21. In addition, approximately $2 million of earnings is expected from property sales at Brendale, QLD and Chirnside Park, VIC. 
Aluminium - Due to the significant hedge position and five months remaining in YEM21, CSR has provided additional disclosure with Aluminium EBIT for YEM21 to be in the range of $14 million to $23 million, assuming all other cost and revenue areas are unchanged.


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