Higher energy costs to impact earnings - CSR Limited (CSR) is engaged in manufacturing and supply of building products in Australia and New Zealand and operates in four segments: Building Products, Glass, Aluminium and Property. CSR’s mainfocus areas are to build a chain of responsibility system, Sub-contractor safety management and to develop new Workplace, Health and Safety system to improve efficiency while taking care of incidents and hazards. It exceeded 2020 targets for waste and CO2–e emissions and further work on energy and water is underway and four major energy reduction projects were completed at CSR sites.

In fact, its post 2020 sustainability targets are under review and the group is assessing climate-related risks and opportunities. It is currently reviewing its Climate-Related Financial Disclosures (TCFD) which is in line with Task Force. One of its Solar Project at Golden Grove, SA will provide over 20 per cent of annual electricity consumption at the site and it is the first major project that got completed with CSR’s Energy Improvement Fund which was dedicated to energy saving projects at CSR’s sites. Its core operations performance improved and created a more balanced and resilient CSR. The building approvals remained strong and will support sales volumes in the year ahead and currently 75 per cent of net aluminium exposure for YEM19 is hedged at an average price of A$2,598 per tonne. The earnings will be impacted by the full year effect of higher power related costs. Further, the Company at this early stage of the year expects that net profit pre-significant items will be within the current range of $176 to $204 million for FY18. At Viridian, some operational issues were faced at the commercial factory in Ingleburn, NSW which increased the costs.


Increased earnings and ROFE Performance (Source: Company Reports)

Shareholders have been rewarded with increased dividends and, more recently, a resumption in franking. The Group has a very strong Property portfolio. It operates on a strategy of growing its building products businesses and its position in aluminium remains an important asset for CSR. The Group experienced a growth of 6 per cent in building Products earnings, delivering another record profit which is now more than double the result from five years ago. The stock has been falling since the start of the year. The stock climbed up by 3.03 per cent as on 28 June 2018.  Despite the earlier dip, the stock looks “Expensive” at the current market price of $4.75.

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