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CSR reports weaker results in non-core operations, cuts interim dividend

Weaker results from its non-core operations in property and aluminum outweighed a record six-month contribution from its building products businesses for CSR (ASX:CSR) in the six months ending September 30. As a result, the company trimmed its interim dividend to 15 cents a share from the previous 16.5 cents for the half-year.

CSR reported that net profit after tax (NPAT before significant items) for the half fell 15% to $94 million, from $110 million in the previous corresponding period. Statutory net profit after tax fell 11.5% to $92 million compared to $104 million in September 2022.

Trading revenue edged up 5.4% to $1.37 billion, with earnings before interest and tax (EBIT before significant items) of $126 million, down 27% from a year earlier.

The company said strong growth in building products, with revenue from this sector up 11% to $1.01 billion, “was offset by a lower contribution from Property and Aluminium.“ Building Products enjoyed a record EBIT of $165 million, up 18% from September 2022, reflecting price discipline as well as volume growth in Gyprock, Hebel, and Bradford. “Improved factory efficiency and operational performance supported the strong result with EBIT margin improving 100 basis points to 16%, and return on funds employed increasing to 31% from 28%,” CSR said in Thursday’s statement.

Property saw a loss of $1.5 million with no material transactions in the half, compared to $28 million of property transactions that settled in the year-ago half-year. CSR says that the second half of this year will see $44 million of earnings from its Horsley Park project.

Aluminum saw a loss of $24 million at the EBIT line, down from $17 million in the previous corresponding period (which included a one-off energy supply payment of $16 million) “with significantly higher energy and coal pass-through costs, and raw material costs remaining volatile at elevated levels.”

CSR CEO Julie Coates said the company’s core Building Products business performed well with record first-half earnings “as the team executed to capture the positive market opportunity and offset inflationary pressures. “ The group result was impacted by input cost volatility in our Aluminum business and timing of Property earnings, with $44 million contracted to settle in the second half.”

Looking to the rest of 2023-24, CSR said it had made “a pleasing start to the second half with focused execution into end markets and ongoing discipline to deliver performance and strategic initiatives.”

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