CSR (ASX: CSR) has announced a FY21 trading update during its annual general meeting (AGM).
What is CSR?
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 the Tomago 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.
FY21 trading update
CSR is holding its AGM today. As part of the presentation the management released a trading update for FY21.
For the first 11 weeks of FY21, building products revenue in Australia is down 3%. Including the impact of New Zealand COVID-19 restrictions, revenue is down 5%. Management were expecting a slowdown in activity, projects started before COVID-19 continue to support revenue.
However, current lead indicators are pointing negative. New home sales in Australia during April and May are down 19% compared to last year. There is a lag in demand for CSR’s products. However, the announced government stimulus measures should be a benefit, though the timing and extent of the benefit is uncertain.
In the Property division the first tranche of the Horsley Park transaction remains on track to deliver $80 million in proceeds and $53 million in EBIT.
In Aluminium, the hedge position hasn’t changed, with 63% of net aluminium hedged at an average price of AU$2,826 per tonne.
Summary
CSR is expecting COVID-19 impacts but it wasn’t able to provide guidance. The CSR share price is down around 25% since COVID-19. It may be a cyclical opportunity if construction can rebound. I’m not sure how long that will take though.
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Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.
