Result snapshot: CSR has announced a full-year net profit after tax (before significant items) of $ 166 million for the year ended 31 March 2016, which is an increase of 13% over the previous year. This is the best result from the company since the sugar business was divested in 2010. After taking into account significant items which includes the transaction costs for the completion of the PGH Bricks JV, net profit after tax was $ 142.3 million, which is 13% up over the previous year. Earnings before interest and tax (EBIT) before significant items was up by 18% over the previous year at $ 276.8 million. This included the consolidated earnings of the PGH Bricks JV (which is 60% owned by CSR) which began trading on 1
st May 2015. The operating cash flow increased by 8% to $ 252.2 million and an increase of 18% in the full year dividend to 23.5 cents per share.
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Resilient Building Products Business (Source: Company Reports)
Diversified building product division: Managing director, Rob Sindel said that the building products division had performed strongly, and delivered a record EBIT of $ 169.1 million, which is an increase of 40% over the previous year including the consolidated earnings of the PGH Bricks JV. The strong performance was supported by solid underlying activity and the earnings of the division grown consistently over the past few years. The PGH Bricks JV is exceeding expectations and Gyprock has reported an excellent result. Because of product development, improved customer experience and operational efficiencies, there has been a steady improvement in the performance of Viridian. The company has strengthened its position in the multi-residential market with investments in building systems (including AFS and Hebel) and the province in the building process. The company today has a more diversified building products business. Higher fixed cost businesses have been restructured so that they are more resilient to market activity changes while increasing market share in the multi-residential segment to broaden the earnings base.
Other businesses also did well with Aluminium reporting EBIT of $ 104.1 million because of increased production driven by operational improvements; and Property reporting EBIT of $ 23.3 million as a result of continued demand for residential and industrial construction in Melbourne and Sydney.
Financial position and outlook: The financial position continues to be strong with net cash of $ 73.1 million supporting the share buyback of up to $ 150 million launched in March 2016 and boosting the company to invest in additional growth opportunities as and when they become available. As regard to the outlook for FY 2017, the company confirmed that residential construction markets continue to see record levels of activity which are expected to support demand in the year ahead. The residential construction activity pipeline continues to grow as total commitments for the 12 months to December 2015 stood at 221,000 compared to 192,000 dwellings in the same period of the previous year. Viridian is expected to show further improvement in earnings as it focuses on revenue growth from high-performance glass and increasing its share in the commercial market. In Aluminium, 51% of its aluminium sales (net of alumina) were reported to be hedged at an average price of $ 2.338 per ton before premiums. Ingot premiums paid to producers about the London Metal Exchange prices have settled down at around USD 110 to USD 115 per tonne. Property earnings are always determined by the timing of transactions, but the continuing development of a number of projects will underpin earnings over the next 5 to 10 years. In short, the company will continue the strategy of investing in building systems that improve the speed of construction, while reducing the complexity of building activity. These investments combined with a more aligned cost structure and network of operations increases the resilience of the company to fluctuations in the cycle of building and leaves it in a better position to meet the future needs of the market.
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