The CSR (ASX: CSR) share price is down around 2% after reporting its half year result to 30 September 2019.
CSR is one of the leading building products businesses in Australia and New Zealand. Gyprock plasterboard, Bradford insulation, PGH bricks and pavers, Monier rooftiles and AFS load bearing for concrete walls are some of the brands offered by CSR. The company is also a joint venture participant in theTomago aluminium smelter, located near Newcastle, NSW. CSR also generates additional earnings from its ‘Property’ division which focuses on maximising financial returns by developing surplus former manufacturing sites and industrial land for sale.
CSR’s FY20 Half Year Result
CSR reported that its trading revenue from continuing operations fell by 4% to $1.15 billion.
Looking at the day to day profit, group EBIT (click here to learn what EBIT means) fell by 16%. The Building Products division saw an EBIT decline of 18% to $95.9 million whilst the Aluminium division experienced a 10% rise in EBIT of $25.4 million.
The slowdown in residential construction activity hurt the result in this half. Housing commencements across the industry down on average by 19%. However, Gyprock and Bradford delivered steady volumes and earnings because of diverse revenue bases across the residential and commercial sectors.
The decline in EBIT led to underlying NPAT from continuing operations falling 20% to $71.6 million and statutory net profit from continuing operations dropping 19% to $68.8 million. Total statutory profit increased 157% to $68.8 million because the prior result included $57.9 million of impairment charges of the Viridian Glass business which was sold on 31 January 2019.
CSR also announced the sale of a 20-hectare industrial site at Horsley Park for around $140 million. The earnings from the sale will be split into two 10-hectare stages which will be recorded in the FY21 and FY23 years.
CSR Dividend
The CSR Board decided to declare an interim dividend of 10 cents per share and a special dividend of 4 cents per share, both franked to 50%. The previously announced $100 million buyback continues, with $47 million shares purchased so far.
CSR Outlook
Management expect the challenging market conditions to continue in the short term, but over the longer term it expects population growth, high employment and low interest rates will support construction activity.
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