Goodwill impairment drives Texas Industries into loss

Goodwill impairment drives Texas Industries into loss
Published: 16 July 2009

In the financial year to the end of May, Texas Industries’ saw turnover decline by 18.4% to US$839.2m and the EBITDA fell by 29.1% to US$109.2m.

A 22.7% rise in the depreciation charge and a jump in net interest payments from US$2.5m to US$33.3m led to a 92.0% drop in the running profit before tax to US$7.7m. Once the exceptional items, notably a US$58.4m goodwill impairment on the cement plant in California, are taken into account, a pretax loss of US$30.4m emerged, compared with a profit of US$127.4m in the previous year.  Net debt at the end of May of US$522.0m gave a gearing level of 65.0%.

Cement volumes in the year declined by 19.9% to 3.66Mt (4.04Mst) and the turnover from cement fell by 21.7% to US$395.3m, of which Texas represented approximately 70%.  The average cement price declined by 3.0% to US$81.93/t (US$90.31/st), with a 14% drop in Californian prices being partially offset by a 2% improvement in the more important Texas market. 

Turnover in aggregates declined by 16.8% to US$237.5m as average aggregates prices improved by 7.1% to US$8.79 per tonne while volumes dropped by 24.6% to 14.94Mt (16.47Mst).  The ready-mixed concrete operations contributed a turnover 16.2% lower at USS309.4m as higher purchasing and transportation costs to some extent offset the drop in volumes of around a quarter.  Prices improved by 5.7 % to US$111.79/m3 (US$85.46/yd) while shipments fell by 24.5% to 2.22Mm³ (2.90Mm3).