Lime key to further profit growth says Adelaide Brighton
Cement and lime supplier Adelaide Brighton Ltd has posted an 11.5 per cent increase to a record full year profit and forecasts further growth in 2008 driven by increases in lime demand.
Adelaide Brighton announced net profit in 2007 of $113.9m, up from $102.1m in 2006.
Investors liked the news, sending the firm’s shares up 17 cents, or 5.01 per cent, to $3.56 by day’s end.
Managing director Mark Chellew said the record annual result was due to the company’s "very heavy alignment" to the booming resource and infrastructure sectors in South Australia, Western Australia and Queensland.
He said lime volumes increased by 6.5 per cent as a result of increased demand in the alumina and steel sectors.
Future profit growth would be driven by continuing demand for lime and "sustained or moderate increases" in concrete, along with contributions from downstream business acquisitions completed in 2007.
"We predict continuing mine growth over the next decade due to the continuing resource boom in Australia," Mr Chellew said.
"The growth of Australia ... is dependent on the resources boom in China.
"If you believe the China story, which we do, I think the growth can continue for quite some time."
Revenues rose by 11.8 per cent to $888.4 million.
Adelaide Brighton said a potential softening in the West Australian cement market this year would be offset by further market growth in Queensland and South Australia.
Lime sales in WA could be boosted by reserve positions, which could help the firm supply Woodside Petroleum Ltd’s Pluto and Chevron Corp’s Gorgon gas projects, Mr Chellew said.
Adelaide Brighton made a number of acquisitions in aggregates and ready mixed concrete last year.
Mr Chellew said changing debt markets would not temper Adelaide Brighton’s appetite for acquisitions but would make it more "diligent" in 2008.
"The credit issues in the world has probably increased our cost-to-lending by maybe 20 to 30-basis points, which is relatively small," he said.
"It just means that we’ll become more diligent on what we buy, going forward."
Although Mr Chellew said there was "nothing happening in the next month or two" on the acquisition front, "there are things that we’re always looking at, and when, and if, they arise we’ll look at them".
Adelaide Brighton saw takeover opportunities in lime, cement and additives, he said. Published under Cement News
