If CSR disposes of its aluminium business there will be a huge...

If CSR disposes of its aluminium business there will be a huge chunk (almost 50 %) of its profits gone. It will need to improve its earnings capacity somehow. Cost-cutting is not enough.

CSR also needs to build critical mass to effectively compete with growing larger rivals like Boral and Fletcher. Competitors have been building up their operations over the past year. It is preferable to expand during cycle lows (not highs) when assets of sometimes stressed businesses can be acquired at bargain prices.

If CSR management is serious about expanding into the complementary fixtures and fittings space, they should consider businesses in these industries, especially with leading Australian brands.

Any potential target must have consistent earnings and generate positive cash flows.

A bolt-on acquisition could be up to about half the size of CSR.

The cash purchase of suitable businesses at the RIGHT PRICE would give CSR more scope to position itself for the upturn in construction activity which I do not believe will occur before the present Federal Government ends its term.


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