Summary
- CSR Limited posted a decline of 15 per cent in net profit to A$58.7 million for HY21 ended 30 September 2020
- A 6% decline in the revenue to A$1,075.5 million was also seen due to slowdown in residential construction and lower Aluminium prices.
- Higher cost reduction and lower Aluminium price led to a net decline in EBIT of 17% to A$94.4 million.
- Despite some red numbers, the group announced 8.5 cps of interim dividend and 4.0 cps of a special dividend, both fully franked.
- Nigel Garrard has been appointed as a non-executive director, effective from 1 December 2020.
- The stock inched up by ~5% to $4.63, after breaking four days losing streak
On 2 November 2020, CSR Limited (ASX: CSR) released its half-year financial results ended 30 September 2020 with a 15% downtick in statutory net profit after tax to A$58.7 million. The NPAT before significant items stood at A$66.4 million and approx. eight million restructuring cost was deducted towards team reorganisation and streamlining.
The revenue was also down by 6%, from A$1,150.1 million in HY20 to A$1,075.5 million in HY21, primarily due to slowdown in residential construction and lower Aluminium prices.
Image Source: CSR Limited’s ASX Update dated 2Nov 2020
The group EBIT was reported at A$94.4 million, down by 17% from A$113.1 million in HY20. The decreased EBIT reflected lower Aluminium prices and cost reduction. The bifurcation of EBIT is
- Building Products – increased from A$95.9 to A$96.3 on account of cost reduction and factory efficiency measures.
- Property – No material transactions were recorded, however transaction of Horsley Park in 2H YEM21 is expected to garner A$53 million of EBIT
- Aluminium– Decline in the Aluminium price, a massive fall of 76% is witnessed in EBIT from A$25.4 million to A$6.2 million.
- Corporate – Like the previous corresponding period, this segment yielded negative EBIT, from (A$6.0) to (A$9.8).
Strong Cashflow generation
The group has improved its working capital following destocking initiatives and managing production to sales levels. This has led to an increase of 5% in the operating cash flow, from A$116.4 million to A$121.7 million. Net movement in working capital has also improved from negative A$11.1 million to A$32.5 million.
The group has also reduced the capital expenditure in order to preserve more cash which has come down from A$66 million to A$53 million. Although, the total Capex for YEM21 expected to be approximately A$112 million, including A$42 million towards a property.
Dividend Distribution
The group has maintained a strong liquidity position and maturity profile. Despite a 15% downtick in the NPAT, a fully franked interim dividend of 8.5 cps has been announced. Another special fully franked dividend of 4.0 cps has been declared, reflecting visibility of the first-half operating environment
The full-year dividend for YEM21 (excluding special dividends) is expected to be in line with the group’s policy to maintain a payout ratio of 60-80% of full-year net profit after.
Nigel Garrard appointed as a non-executive director
The group also announced Nigel Garrard’s appointed to the board as a non-executive director, effective 1 December 2020.
He was the Managing Director & CEO of a packaging manufacturing company Orora Limited from 2013 to 2019. He also had a number of senior positions in the same industry.
Stock Performance
The stock is trading at $4.63 (as at 1:03 PM AEDT), up by 4.988% on 2 November 2020. After four consecutive losing sessions, the stock is trying to break losing streak.
The stock has already fallen by 8.7% from its October high of $4.93 but trading comfortably above the March low of $2.75. The one-year return of the stock stands at negative 5%.
