Ailing glass division pushes CSR into the red
The difficulties were compounded by an across-the-board slump caused by the weak home building market, which pushed CSR into the red in the year to March, resulting in a net loss of $146.9 million. This reversed the profit of $76.3 million earned a year earlier.
The loss per share stood at 29¢, compared with a profit of 15.1¢ a share a year earlier.
The company said the glass division would report an "improved result" this financial year, but the full benefits of its restructuring, and associated job losses, would not be felt until 2014-15.
CSR said it expected a slight improvement in the housing market this financial year, following a difficult year, particularly in the important Victorian market, which slumped 13 per cent after three years of growth. This was in contrast to the 1 per cent rise in NSW and the 10 per cent bounce in Queensland, although off a low base.
Multi-residential housing also declined, but the Sydney and Melbourne markets remained "reasonably strong", it said. This sector now accounts for 40 per cent of all housing starts, up from about a third, historically.
Pretax profit at the building materials division was $77.4 million, down 11 per cent, while the Viridian glass division posted a loss of $38.8 million, double that reported a year earlier.
The consolidation of Victorian glass operations at Dandenong has resulted in 37 jobs being cut. In NSW, a similar move will lead to the loss of 170 jobs.
The aluminium division's pretax profit fell to $38 million, hurt by lower hedging profits and the stronger Australian dollar.
The property division made no contribution to the result. Work is under way on a 533-lot residential project at Chirnside Park in Melbourne, the first development in the area for more than a decade. This is expected to deliver revenue of $155 million in six stages over the five-year development period.
CSR had forecast a net profit of between $30 million and $34 million, before writeoffs and provisions. The final figure was $32.7 million, down from $90.7 million.
Frequently Asked Questions about this Article…
CSR reported a net loss of $146.9 million in the year to March after a weak home building market and a $196 million provision booked against its glass division. Poor results across divisions — including a large loss at Viridian glass and lower profits in building materials and aluminium — reversed the prior year's $76.3 million profit and produced a loss per share of 29 cents (vs a 15.1c profit per share a year earlier).
CSR booked a $196 million provision against its glass division in the latest financial year, a key factor cited in the company’s weaker overall result.
CSR warned the glass division will remain a drag on performance in the year ahead, although it expects an "improved result" this financial year. The company said the full benefits of its restructuring and associated job losses would not be felt until 2014–15.
A slump in the home building market weighed on CSR’s sales and profits. Victoria fell sharply (down 13% after three years of growth), NSW rose about 1%, and Queensland bounced 10% off a low base. Multi‑residential housing also declined overall, even though Sydney and Melbourne remained "reasonably strong," and multi‑residential now accounts for about 40% of housing starts.
Pretax profit at the building materials division was $77.4 million (down 11%). The Viridian glass division posted a $38.8 million loss, roughly double the prior year’s loss. The aluminium division’s pretax profit fell to $38 million, hit by lower hedging profits and a stronger Australian dollar. The property division made no contribution to the result in the period reported.
Yes. Consolidation of Victorian glass operations at Dandenong resulted in 37 job cuts, and a similar move in New South Wales is expected to lead to the loss of about 170 jobs.
CSR said it expected a slight improvement in the housing market in the coming financial year and that the glass business would report an improved result, with full restructuring benefits not due until 2014–15. The company had previously forecast a net profit of $30–34 million before write‑offs and provisions; the final figure cited in the article was $32.7 million, down from $90.7 million.
CSR’s property division was not contributing to the result at the time, but the company is progressing a 533‑lot residential development at Chirnside Park in Melbourne. That project is expected to deliver about $155 million of revenue in six stages over a five‑year development period, which could support future property revenue.
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