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CSR awaits recovery in housing construction as profits tumble 50%

15 Nov 2012 SYDNEY MORNING HERALD - DREW CRATCHLEY - BUILDING PRODUCTS



THE property downturn has led to a 50 per cent fall in profit for the building products maker CSR, and it says a recovery in the sector is unlikely before the middle of next year.

CSR's net profit fell from $34.9 million in the first half last year to $17.5 million for the six months to September 30, reflecting a 14 per cent decline in housing construction over the same period.

The result included $2.9 million in costs from the restructure of CSR's building products business and its aluminium joint venture, in response to weak activity. "The key external drivers that impact CSR's profitability were all materially worse this period," the managing director, Rob Sindel, said.

CSR expects its profit for the full year to March 31 to be between $35 million and $45 million, down from $76.3 million.

Despite the weaker results, CSR shares closed 11? higher at $1.66.

The company forecast total housing starts in Australia for the year ending next March would be down 9 per cent from the previous year.

Mr Sindel said there were signs of a recovery beyond that, most notably a rise in finance approvals over eight consecutive months.

"A combination of falling interest rates and improved state government stimulus programs in NSW, Queensland and South Australia should enable a moderate recovery in residential activity in the next financial year," he said.

CSR's glass business, Viridian, remained a burden, making a loss of $11.7 million in the six months to September, as low sales volumes and the high Australian dollar had an impact.

Viridian is the most trade-exposed and highest fixed-cost business in CSR's portfolio.

The building products division, which makes Gyprock and PGH Bricks among others, delivered earnings of $43.4 million in the six months to September, down 12 per cent.

The first-half earnings from CSR's aluminium business dropped 57 per cent to $18.3 million.

CSR halved its interim dividend to 3? a share.