Leading building products company CSR Limited (ASX: CSR) has reported strong operational and financial performance for the full year ended 31 March 2019 (YEM 19). The company’s building product business performed well during the year with Building Products revenue reaching $1.7 billion. The company witnessed growth across most products and segments. Building Products and Property business are now representing 87% of group earnings.
The company’s revenue from continuing operations increased by 4% in YEM 19 and reached to $2,322.8 million. Further, the company has reported a net profit after tax from continuing operations of $181.7 million, down 14% on the previous corresponding period (pcp) due to lower Aluminium earnings.
With net cash of $50.0 million, the company is having a strong financial position. Further, the company is expecting to receive an additional $188 million in cash proceeds during the current financial year, providing flexibility to invest in new building systems and ongoing Property projects. The company’s strong cash flow is supporting dividends and investment in growth projects and Property. The board has declared a final dividend of 13.0 cents per share (50% Franked), taking the full year dividend to 26.0 cents per share.
Recently in March 2019, the company launched a $100 million share buyback to return surplus cash to its shareholders. At the group level, CSR delivered EBIT from continuing operations of $265.0 million (before significant items), down by 17% on pcp, driven by higher electricity costs in Aluminium which delivered $36.6 million in EBIT down from $79.5 million last year.
During the year, the company completed the sale of Viridian Glass in line with its strategy to deliver targeted returns of 15% ROFE. Property capex continued to be self-funding in YEM19, with $110m cash inflow from committed sales at Horsley Park, NSW and Rosehill, NSW expected in the second half of YEM20.
While providing the outlook for the year ending 31 March 2020, the company noted that the building products volumes in the first month of YEM20 are currently consistent with the final quarter of YEM19. However, due to mixed economic signals, it has become difficult for the company to predict building activity levels for the year ahead. The company is making changes to its operating footprint and overheads to mitigate the impact on earnings.
While providing an outlook for its property business, the company has advised that the quantum of earnings may fluctuate due to the timing of transactions. Further, the ongoing development of a number of major projects will underpin Property earnings over the next 10 years.
In the last six months, the company’s shares increased by 3.67% as on 7 May 2019. At the time of writing, i.e., on 8 May 2019 AEST 1:08 PM, the stock of the company was trading at a price of A$3.330, down 1.77% during the day’s trade with the market capitalisation of ~A$1.7 Bn.
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