The Adelaide Brighton Ltd (ASX: ABC) share price fell 6% today after announcing their full-year results to the ASX. The results were for the period ending 31 December 2018, with net profit after tax (NPAT) up 1.4% to $185.3 million.
Adelaide Brighton is an integrated construction materials company which manufactures and supplies a large range of products including cement, lime and dry blended products.
Key Results
Adelaide Brighton reported:
- Revenue up by 4.6% to $1.63 billion
- EBIT down 0.8% to $265.4 million
- NPAT up by 1.4% to $185.3 million
- Profits/earnings per share up 1.4% to 28.5 cents per share (cps)
- Operating cash up 9.1% to $244.7 million
- Final ordinary dividend of 11cps and a special dividend of 4cps, both fully franked.
Management Commentary
Adelaide Brighton CEO Nick Miller attributed the revenue increase to, “capitalising on the favourable demand environment for construction materials and lime as well as the delivery of expectations for the concrete and aggregate acquisitions made in 2017”.
It seems there are no concerns of a housing slump impacting ABC as Mr Miller said the company has strong operating cash flow, “which ensures a healthy balance sheet and the capacity to fund growth and sustain attractive shareholder returns. Dividends for 2018 increased 14% on 2018 to 28 cents, reflecting the board’s confidence in the financial position and outlook”.
Operations Overview
ABC said the Eastern coast was strong throughout the year, with Queensland demand up and demand in the two major states of New South Wales and Victoria remaining robust. Demand was stable in the Northern Territory, while demand declined in South Australia and Western Australia.
However, ABC said that while cement and clinker sales increased overall by 1.1%, cement margins declined in the second half of the year due to falling volumes, lower average realised prices and higher import costs.
Rask Perspective
Adelaide Brighton is a price taker with its products facing reduced demand. I prefer companies with pricing power and differentiated products, so this is not a stock I am interested in adding to my portfolio.
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