time to act

It is time for CSR to seriously review its stake in the Tomago aluminium smelter. The challenges to profits are mounting for continuing this business. These include a high Australian dollar, ongoing global oversupply of aluminium, low spot prices for aluminium, stodgy world economic growth, rising labour and power costs and of course the pending carbon tax.

Divestment of this interest is consistent with the stated CSR strategy for demerging Sucrogen to focus on local building products.

It is time for a major acquisition. Realisation of the aluminium investment will contribute proceeds, together with the lazy cash on the balance sheet, to make a significant earnings accretive acquisition to bulk up earnings capacity.

The time to expand is at lowpoints in the cycle, when competitors are vulnerable and share prices are low.

Unlike the Viridian purchase, where they overpaid at the top of the market, there are buying opportunities emerging in the industries they are interested to buy profitable operations at the right price.