AdBri sees strong rise in half-year profit

AdBri sees strong rise in half-year profit
21 August 2015

Adelaide Brighton Ltd reported net profit after tax for the half year ended 30 June 2015 of AUD82.6m, an increase of 61.3 per cent compared to the previous corresponding period. Adjusted fo significant items, the underlying advance was 5.6 per cent to AUD83m.

Property transactions contributed AUD12m to net profit. Revenue of AUD678.1m was 12.6 per cent  higher YoY supported by higher cement and lime volumes, improved prices, property revenue and the
contribution from acquisitions completed in the second half of 2014.

EBIT increased 49.2 per cent to AUD116.8m.

EBIT was constrained in the previous corresponding period 
by significant items totalling AUD14.2m, including the rationalisation of clinker production at Munster, acquisition expenses and corporate restructuring costs. Underlying EBIT of AUD117.3m increased 26.8 per cent compared to the year before supported by AUD13m pre-tax profit (previous year: AUD1m) from
property transactions. Excluding property, underlying EBIT increased 14 per cent YoY which was
approximately in line with revenue growth.

The underlying EBIT margin improved to 17.3 per cent from 15.4 per cent in the previous corresponding period. Excluding property earnings , the underlying EBIT margin was 15.4 per cent, up slightly from
15.2 per cent in the previous year. 

The geographic mix of cement sales, lower earnings from joint ventures and rising import costs due
to the weaker Australian dollar, all adversely impacted margins. However, these pressures were
more than offset by increased volumes, and like-for-like selling prices and rationalisation benefits, allowing modest margin expansion (excluding property earnings).

Improved demand led by the residential sector 
Total cement and clinker sales volumes increased. Demand growth on the east coast of Australia, led by strength in the residential sector more than compensated for lower sales volumes in South Australia. Demand from the resources sector was stable.

Recovering demand in Victoria was encouraging, supported by growth in both the residential and non-residential segments.

South Australia was affected by the loss of some contracted volume as previously advised to the market, a decline in the non-residential sector due to the completion of major projects and a pause in sales of back fill binder to some mining operations, while the residential sector was stable versus
the previous year. There is currently a lull in major projects in South Australia, ahead of the start of several major infrastructure projects slated for 2016 and beyond.

The New South Wales, Queensland and Western Australian markets were supported by growth in residential construction. Sales volume of cement to major resource projects in Western Australia and the Northern Territory were in line with the previous corresponding period, albeit with the Northern
Territory modestly affected by an extended wet season.

Selling price increases were achieved in the majority of markets during the first half, however, the average realised cement and clinker price was lower, reflecting a change in sales mix toward lower priced markets.

Import volumes continued to grow as the com pany took advantage of competitive offshore supply to meet domestic demand growth
while rationalising domestic manufacture. The volume of imported cementitious material is on track to exceed 2.1Mt on an annualised basis
in 2015, representing more than 20 per cent of estimated industry demand.

Published under Cement News