CSR Limited’ Shares Plunged On ASX After Reporting Poor Results In The First Half Of FY 2019

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CSR Limited (ASX: CSR) released its first half-year financial report on 2 November 2018 in which the company reported that the Net profit after tax from ordinary activities after significant items decreased by 77 percent to $26.8 million as compared to the previous corresponding period. Following this news, the share price of the company decreased by 8.217 percent.

As at 30 September 2018, the revenues of the company were up by 6 percent to $1,399.2 million as compared to the previous corresponding period. The Net tangible assets per share attributable to CSR shareholders increased from $2.09 in 1HFY18 to $2.15 in 1HFY19. The company’s EBIT of $142.1 million was down by 32% in 1HFY19 due to the expected decline in earnings from Aluminum and the timing of Property profits which will be weighted to the second half of FY 2019. The earning per share of the company decreased from 27.1 cents in 1H FY18 to 18.7 cent in 1HFY19.  

The Net debt of the company was $68.5 million in 1HFY19 which was increased from $14.3 million as of 31 March 2018 following investment in Property projects and the construction of the new $75 million Hebel plant in Somersby, NSW which is due for completion in April 2019. Cash proceeds of $110 million from the previously announced Rosehill and Horsley Park property sales are expected in the year ending 31 March 2020.

In 1H FY19, the company made a capital expenditure of $57.8 million which includes $24.0 million for stay-in-business projects and $33.8 million for development-related capital expenditure including investment in the AFS Rediwall manufacturing facility in Minto, NSW and Hebel’s new factory in Somersby, NSW.

The fundamentals for housing are looking reasonably strong for future growth, driven by the population growth and a stable environment for employment and interest rates. The company is expecting that the 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).

The board declared an interim dividend of 13.0 cents per share, franked at 100% which represents a dividend payout ratio for the half year of 70% of net profit after tax (before significant items). It is expected that the full year dividend will be in line with CSR’s stated dividend policy to pay out 60-80% of full-year net profit after tax (before significant items).

In the last six months, the share price of the company decreased by 36.23 percent as on 1 November 2018. CSR’s shares traded at $3.295 with a market capitalization of circa $1.81 billion as on 2 November 2018 (AEST 1:28 PM).


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