Jan. 31 (Bloomberg) -- Rinker Group Ltd., Australia's biggest building materials maker, said third-quarter earnings increased 48 percent as its U.S. unit took advantage of a construction boom in Florida to raise prices.
Net income climbed to $161 million, or 17.5 cents a share, in the three months ended Dec. 31, from $109 million, or 11.6 cents, a year earlier, the Sydney-based company said in a statement today. Sales increased 14 percent to $1.24 billion.
``They seem to have pricing power in their U.S. markets and are delivering the goods,'' said Rob Patterson, who manages about $2.3 billion in Australian stocks at Argo Investments Ltd. in Adelaide, including Rinker. The shares are a ``good solid hold from our point of view,'' he said.
Chief Executive Officer David Clarke today increased his U.S. full-year profit growth forecast for a fourth time, to 40 percent from 35 percent. Rinker gets about 80 percent of earnings in the U.S., mainly in Florida and Arizona, which are growing faster than the rest of the country.
``Rapid population growth in these states continues to drive their long record of outperforming the rest of the U.S. in construction activity,'' Clarke told analysts in Sydney today. Price increases of up to 10 percent helped counter increased costs for imported cement and rising electricity, fuel and ocean freight charges, he said.
U.S. Construction
Rinker also sells gravel, cement and asphalt used in roads and bridges, helping it weather a slowdown in residential demand. The Portland Cement Association, which represents cement companies in the U.S. and Canada, has forecast a 2.2 percent decline in U.S. housing demand for 2006, Rinker said.
The association expects total U.S. construction spending to rise 1.3 percent this year on commercial and public construction demand.
Construction demand in Florida grew an average 8 percent a year over the past 15 years, compared with 5 percent across the rest of the USA, Clarke said.
Rinker's ``diverse exposure to housing, the non-residential market and the highways market ensure that earnings are somewhat insulated,'' analysts at Macquarie Bank Ltd. in Sydney wrote in a note to clients today.
Shares Fall
Rinker shares, which have more than tripled since the company was spun out of CSR Ltd. in 2003, reaching in excess of $17, fell 12 cents to A$16.93 on a quiet day. Clarke didn't provide a profit forecast for the year starting April 1, or extend a share buyback, as some analysts had anticipated.
Clarke said he would rather use money for acquisitions.
``There are some growth opportunities we are examining,'' he said. ``We have added some additional resources and we continue to knock on a lot of doors.''
Third-quarter earnings before interest and tax in the U.S. rose 42 percent to $213.1 million, boosted by price increases for crushed rock used to make building products, concrete, blocks and asphalt. Cement earnings fell 11 percent as the cost of imported cement rose 45 percent, Rinker said.
Profit at Rinker's Australian Readymix unit rose 24 percent to A$52 million ($39 million), as its 25-percent-owned Cement Australia booked a tax gain. Sales rose 4 percent to A$352 million. Clarke expects full-year profit at the unit to be the same as last year.
RIN
rinker group limited
