Rinker says outlook clouded by uncertainty about US housing market
Rinker Group Ltd said its earnings outlook is clouded by uncertainty over the direction of the US housing market.
The construction materials group, which earns more than 80 per cent of its income in the US, said a slowdown in the US housing market impacted on its earnings growth in the year to March.
Rinker, currently under a US$14.25bn takeover from Cemex reported a 5.7 per cent rise in net profit for the year to March to US$782.4m from US$740.2m a year earlier, in line with market expectations.
Rinker’s directors have recommended Cemex’s revised offer of 15.85 usd a share, made this month, in the absence of a superior offer.
They rejected an earlier offer of US$13/share, made last year, as being inadequate.
Rinker said the latest year’s comparable profit (net profit after stripping out one-off items) rose seven per cent to US$778m. This excludes US$11m in takeover defense costs, a US$16m tax consolidation gain and the previous year’s US$16m gain on the sale of its asphalt business in Australia.
The group said its US subsidiary, Rinker Materials, delivered a strong result despite the housing slowdown, which impacted particularly heavily in the fourth quarter.
Rinker Material’s full year earnings before interest and tax (EBIT) rose eight per cent to US$1.058m while EBITDA also rose eight per cent to US$1.230bn though revenue rose just 3 per cent to US$4.140bn.
The Australian subsidiary, trading as Readymix, increased EBIT in local currency by one per cent to A$239 mln aud and EBITDA also by one per cent pct to A$305m.
The group expects Rinker’s underlying profits possibly falling by around 10 per cent in the year to March 2008.
Group chief executive David Clarke said the outlook for the current year was mixed, with some markets expected to perform better than last year and others still declining.
"We are confident about the long-term fundamentals which underpin the value of Rinker," Clarke said.
"However, there is a high degree of uncertainty in regard to the timing and scale of the recovery in US housing, and particularly Florida housing, which makes short-term profit guidance for Rinker difficult." Published under Cement News
