Australian cement and lime producer Adelaide Brighton Ltd remains positive about the future despite facing maintenance cost increases and mixed market conditions in the first half of the financial year. Earnings were broadly steady as higher maintenance and energy costs offset increased cement sales prices and improved operating performance, the company said. Adelaide Brighton managing director Mark Chellew said higher raw material costs will be passed on through price increases.
"We have had maintenance cost increases in the first half which will not be replicated in the second half and on balance we will be fully recovering the inflationary impacts this year," he said.
Mr Chellew remained confident about the future of the company despite the increased maintenance costs, higher gas charges and mixed market conditions. "The market going forward is still relatively robust," he said. Adelaide Brighton said it’s on track to deliver a full year net profit of between A$92 million and A$96 million after reporting a lift in interim earnings.
The construction materials company today announced a net profit of A$39.73 million for the first half of 2006, up 3.1 per cent on the previous corresponding period. Mr Chellew was not concerned with the severe downturn in the building products sector in New South Wales, although he said this would hurt their C&M Brick business. He said the recent rate hikes could impact business, although it was too early to tell, however, the company would manage costs to minimise the impact.
"There is no doubt that the increased interest rate environment has subdued any recovery that could be going on in the housing sector, especially in New South Wales," he said. Mr Chellew said Queensland and Victorian markets are projected to hold at current levels due to continuing infrastructure and non-residential demand. The development of Austen Quarry continues and phase two of the project is expected to be completed in the first quarter of 2007, while the alternative fuel project in South Australia is running "positively."
The company expects demand for lime to steadily increase over the next five years. Adelaide Brighton expects to sell an additional 400,000t of lime a year by the end of 2012, Mr Chellew said.