Cement maker Rinker Group has doubled its profit growth forecast less than a week after its former parent, CSR, also raised its estimate of likely earnings.
Shareholders at Rinker Group’s annual general meeting in Sydney were told by chairman John Morschel that both the American and Australian arms of Rinker would deliver a 20 per cent increase in annual operating earnings profit before finance and tax in their local currencies.
Rinker had indicated an increase in operating earnings of between 5 per cent and 10 per cent when it announced in May its results for the year ended March 31.
But it does not predict its likely after-tax profits because of the impact of exchange-rate fluctuations upon its earnings, almost 80 per cent of which are sourced in the United States.
Mr Morschel attributed the improved outlook to "unexpected demand in our key markets, and the so-far successful implementation of price increases, to offset most recent cost increases".
A price increase of $US5 a ton for cement was set in place for most customers in Rinker’s key market of Florida on July 1.
The Florida market is particularly vulnerable to fluctuations in imports since the state imports about 40 per cent of its cement, compared with a US average of about 22 per cent.
Cement shortages have been widely noted in Florida, and to a lesser extent in other US states that rely on imports for their supply, as demand from the housing industry remains high and rising demand from China adds new pressure to the marketplace.
For the three months to June 30, Rinker reported a 24 per cent surge in earnings before interest, tax, depreciation and amortisation to US$223.6m.
US cement notched up a nine per cent EBITDA improvement for the June quarter, while the concrete, block and asphalt business in the US recorded a 33 per cent jump in earnings.
Rinker’s Australia unit, Readymix, posted a 21 per cent improvement in earnings for the same period.