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 broad slump in the home building market and problems in its glass division. The company also booked a $196 million provision against the glass business, reversing the prior year profit of $76.3 million.
CSR’s Viridian glass division posted a $38.8 million loss, roughly double the prior year’s loss. CSR said the glass division will continue to drag on performance but expects an “improved result” in the coming financial year, with full benefits from its restructuring (including job losses) not expected until 2014–15.
Pretax profit at CSR’s building materials division fell 11% to $77.4 million. The aluminium division’s pretax profit dropped to $38 million, hurt by lower hedging profits and a stronger Australian dollar.
Yes. Consolidation of Victorian glass operations at Dandenong resulted in 37 job cuts, and a similar consolidation in New South Wales is expected to lead to the loss of 170 jobs.
CSR expects a slight improvement in the housing market in the coming financial year after a difficult year. The company noted regional differences: Victoria slumped 13% after three years of growth, NSW rose about 1%, and Queensland bounced about 10% off a low base. Multi‑residential housing declined overall, though Sydney and Melbourne remained reasonably strong.
CSR’s property division made no contribution to the result for the year. Work is under way on a 533‑lot residential development at Chirnside Park in Melbourne, expected to deliver about $155 million of revenue in six stages over a five‑year development period.
CSR had forecast a net profit of between $30 million and $34 million before write‑offs and provisions. The final reported figure mentioned in the report was $32.7 million, down from $90.7 million the prior year, reflecting the impact of write‑offs, provisions and the weak housing market.
Investors should monitor progress on the glass division’s restructuring and any further provisions, quarterly or half‑year results showing whether the glass business is improving, trends in the Australian housing market (especially Victoria, NSW and Queensland), and updates on the Chirnside Park development revenue timing. These factors will influence CSR’s recovery and future profitability.
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