Cement, lime and concrete producer Adelaide Brighton Ltd believes sustained demand for cement and increased lime volumes will underpin its performance in 2007.
Lime will be the key growth market for the company, with demand being driven by the continuing resources boom in Western Australia, managing director Mark Chellew said.
The company has forecast a 320,000t increase in lime demand in WA, the Northern Territory and South Australia over the next five years.
Addressing the company’s annual general meeting in Adelaide today, Mr Chellew said he expected overall cement demand to remain stable, with growth in Western Australia plateauing and weakness in NSW offset by higher demand in Queensland.
Adelaide Brighton is the only national supplier of cement to all mainland states and territories and the sole supplier of lime to WA.
The company delivered a record result in calendar 2006, as net profit rose 12.3 per cent to $A102.12m ($US84.4m) after revenue growth of 10.3 per cent to $791.25m.
In 2007, Adelaide Brighton will seek price increases for lime to recover manufacturing cost inflation and improve margins to sustain future long term capital investment in its lime operations.
About $45m will be invested over the next four years to improve cement and lime kilns, which is expected to improve plant outputs by 20 per cent and deliver $25m in annual cost reductions by 2012.
The company will also continue discussions with fellow cement makers Rinker and Hanson regarding the ongoing supply of cementitious materials after the current contract expires at the end of 2008.
Mr Chellew said the company’s Hy-Tec concrete operations had delivered its best ever result in 2006, despite a further slow-down in NSW, while concrete block, brick and paver business, C&M Brick, made a turnaround despite weaker demand in all three of its markets in NSW, South Australia and Victoria.
Chairman Malcolm Kinnaird said Adelaide Brighton’s exposure to the resource, engineering and infrastructure markets in WA, South Australia, Queensland and the Northern Territory continued to underpin sales.
He said the acquisition last month of Hurd Haulage, an aggregates company based in the emerging north eastern NSW market, was an indication of the company’s growing expertise in aggregate production and supply.