CSR shares soar on upgraded 2005 outlook15/07/04 By: Stephen...

CSR shares soar on upgraded 2005 outlook
15/07/04 By: Stephen Blaxhall

CSR Limited (CSR) shares rose 7% in the first hour of trading today as the company’s chairman painted a rosy picture for Australia’s largest producer of raw sugar for the next year. Although CSR announced a net profit result, for 2004 of $160 million, below last years result, the company said it expected a 15% rise looking ahead to pre tax profits to March 2005.

Looking forward the company believes a rise in global sugar prices and an improvement in the company’s other divisions will boost results.

“The combination of a lower exchange rate, higher commodity prices and achievements in operational improvements has now improved the outlook for our results,” said Alec Brennan, CSR’s managing director.


“With a softer housing cycle (rather than crash) as expected but also improved sugar outlook and longer term growth from aluminium CSR is a strong cash flow business,” added Scott Marshall, Head of industrial research at Shaw stockbroking in Sydney.

CSR’s chairman outlined a number of changes in the last year that moving forward its chairman said would help boost results, these included the demerger with building material company Rinker, which has seen the two companies combined share price rise over 80% since the announcement less than two years ago.

During the year, the CSR board advised it had made changes across its diversified portfolio that includes businesses in Building Products, Aluminium and Sugar sectors.

The company in the last year has also eliminated more than $15 million in annual overhead expenses, while investing $237 million in growth projects and returning $154 million to shareholders in the form of dividends and a share buyback. This, the company said was the equivalent to about 8% of CSR’s market capitalisation.

“Despite pressure on sugar profits and a relatively flat market for Building Products, our Aluminium operations recorded a strong increase in profits, and our emerging Property activities also made a solid contribution to total returns,” said chairman Ian Blackburne of the 2004 results