Ferrets Stock to Watch: ADELAIDE BRIGHTON LTD 08:45, Thursday, 1...

Ferrets Stock to Watch: ADELAIDE BRIGHTON LTD
08:45, Thursday, 1 June 2006

A COMPANY RIDING THE RESOURCES BOOM WITH SUCCESS

Sydney - Thursday - June 1: (RWE Aust Business News)
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OVERVIEW
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Shares of Adelaide Brighton Ltd (ASX:ABC) crept up yesterday,
recovering from the previous day when chairman Malcolm Kinnaird gave
an impressive run-down on last year and what to expect in the current
period.

However, analysts lost interest when guidance was no more than
expected.

They tended to look at a building downturn in NSW as a bit of a
worry while ignoring the fact that much of Adelaide's business revolved
around industrial/mining companies in the March quarter at which this
sector was at record levels.

The chairman told shareholders at the annual meeting on Tuesday
that a key driver of demand during 2005 was the resource sector growth in
major markets in WA, SA and NT.

"This demand was for our core products of cement and lime and has
resulted from the surge in global demand for the Australian natural
resources of alumina, iron, uranium, nickel, steel and gold," he said.

"A specific example in South Australia is the BHP Olympic Dam
mine expansion which has resulted in double the demand for our
'Backfill Binder', a cementitious product used for stabilising
underground mining operations.

"Our exposure to the resource sector and our broad geographic
spread in the engineering and construction sectors will continue to be an
important asset with regard to our future performance.

"In addition to our record profit growth, the balance sheet
is strong and well positioned to meet the future needs of the company."

The gearing ratio of net debt to equity was 35.8 per cent at the
end of 2005 and this provides the basis for future organic and strategic
growth opportunities, Mr Kinnaird told the meeting.

He emphasised that 2005 was a successful year for the company and
delivered another record result, an increase in operating cash flow and a
strong balance sheet.

The 2005 result was underpinned by the further progression of our
business strategy, sound operating performance and continued strong
demand for our products in most markets.

The key results for the year to December 31, 2005 were:

* A record net profit after tax and minorities of $87.8 million,
a 10.8 per cent increase over 2004.

* Sales revenue of $717 million, a 5 per cent increase over 2004.

The result provided the basis for a further improvement in
shareholder return through the increase in the full-year dividend to
10.5c, a 40 per cent increase over 2004.

The progressive increase in dividends over the last five years,
together with the appreciation of the share price, delivered a 43.4 per
cent compound annual growth to shareholders over this period.

Mr Kinnaird said this growth confirmed the effectiveness of the
company's strategy, the continued strength of demand for its products and
its ability to meet this demand across all markets.

SHARE PRICE MOVEMENTS
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Shares of Adelaide Brighton yesterday rose 5c to $2.54. Rolling
high for the year has been $2.75 and low $1.75. Dividend is 10.5c to
yield 4.2 per cent. Earnings per share 16.80c while p/e ratio is 14.88.
The company has 5.4 million shares on issue with a market cap of $1.32
billion.

The chairman said the company continued to pursue its long-term
strategic plan which saw its first major move into the manufacture and
supply of aggregates from its Austen quarry in NSW.

The $20 million investment in Phase 1 has been completed and
commercial operations commenced with the supply of aggregates to the
western Sydney plants of its Hy-Tec concrete operations.

Austen quarry will become an important source of supply of
aggregates, manufactured sand and road-base to central NSW following the
exhaustion of the Penrith Lakes quarry at the end of this decade.

The company continued to build on its improved operational
performance which is complemented by its long-term cement and clinker
import supply contracts.

"I believe the Adelaide is well placed in its markets both in
terms of its geographical spread and exposure to the important resource
and infrastructure growth sectors," the chairman declared.

Managing director Mark Chellow told shareholders markets in 2006
have progressed much as projected in the company's internal business
plans, though there have been some further delays in the first quarter
for cement and lime demand from the both the Olympic Dam project and
HISmelt alumina expansion in Western Australia respectively.

Cement markets have continued to grow in Western Australia,
necessitating additional clinker shipments to meet demand.

Demand has held up well overall in South Australia, Victoria and
Queensland.

In NSW demand remains weak due to the continuing softness in the
residential sector, though it is believed that the market has now
bottomed with some improvement possible in the final quarter of this
year.

There has been some temporary impact on lime and cement demand in
Western Australia and the Northern Territory due to the increased
cyclonic activity in these regions compared to last year.

Underpinned by the need to recover inflationary pressures, sales
price increases are being progressively realised in most markets.

The benefit of these price increases will principally benefit the
second-half result, Mr Chellow believes.

BACKGROUND
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Adelaide Brighton Ltd is a leading integrated construction
materials and lime producing company with origins dating back to 1882.

The company has operations in all mainland states and territories
of Australia and employs over 1,400 people.

Today Adelaide Brighton is a member of the S&P/ASX 200 Index,
with a market capitalisation of approximately $1.2 billion and annual
revenues in excess of $717 million.

Core business and markets are:

* production and marketing of clinker and cement products;

* production and marketing of lime products for use in the
alumina and steel sectors;

* production and marketing of ready mixed concrete under the
Hy-Tec Concrete brand;

* production and marketing of concrete masonry products under the
C&M Brick brand;


* marketing of supplementary cementitious materials, such as
fly ash and ground blast-furnace slag; and

* production and marketing of specialist cementitious products
including grouts, mortars, instant concretes, renders and other
engineering products.

Adelaide Brighton believes it is the market leader in the
WA, NT and SA cement and lime markets.

The company also supplies cement in NSW, and its 50 per
cent-owned joint ventures hold strong market positions in cement supply
in Queensland and Victoria.

It holds a position in the ready mixed concrete markets in
Victoria, NSW and southeast Queensland.

The company's concrete masonry products business holds the
second largest market share in the national concrete masonry products
market, with operations in NSW, Victoria and SA.

The major end-use markets of Adelaide Brighton's products
include residential and non-residential construction, engineering
construction, alumina, steel production and mining.

The company's strategic plan is to be a focused vertically
integrated construction materials company.

Adelaide Brighton will continue to review opportunities for
downstream positions in concrete, aggregates and concrete products and
to achieve security of supply for clinker and cement.

ENDS