Australia Adel Brighton H1 profits up

Australia Adel Brighton H1 profits up
Published: 26 August 2004

Australian cement producer Adelaide Brighton said on Thursday its first-half profit rose 5.7 per cent, fuelled by construction demand and acquisitions, and it expected a stronger second half.  The company said robust demand for cement was expected to continue for at least the next two years and strength in the commercial, engineering and infrastructure sectors would offset any regional residential construction downturn.

For the full year, Adelaide Brighton said it was comfortable with recent market forecasts for net profit in a range of A$62m  to A$66m, a rise of 7 to 14 per cent.

Australia’s biggest building products group, Boral Ltd. (BLD.AX), has bid A$867 million ($616 million) for Adelaide Brighton, but the competition regulator has taken court action to block the takeover.

UBS analyst Mark Ebbinghaus said the underlying business was performing well.  "It was a pretty strong result, and I think the market should be encouraged by it," Ebbinghaus said.

Shares in Adelaide Brighton, which supplies cement, concrete and lime, were off 0.7 per cent at A$1.39 in early afternoon trade in a wider market up 0.3 percent.  The stock had previously slipped 6.7 percent so far this year in a wider market that had gained 6.6 percent.

Net profit for the six months to end-June was A$27.7m ($19.7m), up from A$26.2m.  Adelaide Brighton said its first-half result included higher sales due to its acquisition of concrete masonry products company C&M.  It said it had increased cement prices in all regions by A$5-A$10 a tonne, effective in the current third quarter, while strong international cement demand and rising shipping costs had reduced the threat from imports.  "We believe there will be further capacity for cement price increases in the home market during 2005," it said.

Adelaide Brighton Chief Executive Mark Chellew told reporters the regulator’s court case against the Boral bid would probably be finished by the end of October, with a result known later in the year. The takeover was launched last December. "Once the outcome of the court case is known, Adelaide Brighton will have to make a decision about the valuation of the company and a view of the Boral bid," he said.  "At this stage we haven’t got an official view. But the goal posts may have moved since December." Adelaide Brighton also said its first-half result was affected by costs of A$3.1m related to the bid.