Adbri Ltd (ASX: ABC), formerly known as Adelaide Brighton, released its half-year results this morning and shares are rising in early trade.
Did you know you can read more about the company and now use Rask Media’s interactive ABC share price chart?
My take on the Adbri result
The company reported a 7% fall in revenue but managed to deliver a profit of $29.1 million, a 260% increase on 1H19 due to major write-downs in the prior corresponding period.
On an underlying basis, profit fell 14% to $47.6 million. Revenue was heavily impacted by the bushfires in NSW and Queensland over summer and subsequently, a huge slowdown in residential construction post-March 2020.
Commenting on the results, chief executive Nick Miller said, “Adbri remains in a strong financial position and notwithstanding the impact on demand of natural disasters and weaker domestic housing, our wholly-owned operations have expanded their cash earnings margins.”
Management highlighted the resiliency of the company’s production operation, indicating there had been no closures thus far, with the weakness clearly a demand issue as is occurring across the globe.
Looking more closely at the individual business lines, Cement fell 6% due to the bushfires, Lime sales grew 4% as gold and nickel mining ramped up, whilst Concrete fell 13% due to a slowdown in housing construction. Management continues to right-size its workforce and maintain margins in a competitive sector.
For income investors, the company declared an interim dividend of 4.75 cents per share, representing a payout ratio of 65% of underlying earnings.
Adbri has once again declined to offer an outlook statement outside of confirming the loss of Alcoa’s $70 million annual contract.
My take: Difficult half and more to come, I prefer Boral Limited (ASX: BLD) for infrastructure exposure.
