The CSR Limited (ASX: CSR) share price is in the spotlight today after announcing its FY24 half-year result.
CSR has a building products division which includes Gyprock, Hebel and Bradford. It also has a property division and an aluminium division.
CSR share price
FY24 half-year result
Here are some of the highlights for the six months to 30 September 2023:
- Building products achieved record EBIT (EBIT explained), up 18% to $165 million
- Property EBIT was negative $1.5 million
- Aluminium EBIT was negative $24 million, down from $17 million in the prior corresponding period
- Net profit after tax (NPAT) fell 12% to $91.5 million
- Interim dividend of $0.15 per share, down 9%
The building products division managed to achieve growth thanks to “price discipline” as well as volume growth. Improved factory efficiency and operational performance supported the “strong result”, with the EBIT margin improving 100 basis points (1.00%) to 16%.
With the property division, there were no large transactions in the half, compared to $28 million of property transactions which settled in the previous year.
The aluminium division suffered from significantly higher energy and coal pass-through costs, while raw material costs remained “volatile” at elevated levels.
The dividend declared was at the “high end” of CSR’s policy to distribute 60% to 80% of net profit, before ‘significant items’.
Outlook for the CSR share price
CSR said that the detached residential pipeline is still 50% above historical averages. Completions are now marginally higher than commencements, but lead indicators “suggest the stabilisation of [housing] approvals”.
The multi-residential pipeline represents two to three years’ work and non-residential activity is supported by a “large pipeline of approvals”.
It said $44 million of Horsley Park (NSW) earnings were contracted for the second half of FY24 which will help property earnings, with an additional $58 million in contracted earnings in 2025. The sale process for the Darra (Queensland) site is continuing.
With its aluminium division, it’s now expecting a loss of between $15 million and $30 million. It’s expected to return to profit in 2025, with earnings increasing further in the following years due to higher hedged aluminium pricing and lower raw material costs.
The CSR share price is close to its 2022 and 2021 high, conditions are still strong and I wouldn’t call it a buy at this stage. I’d want to wait for a cheaper price before investing because of how cyclical demand can be. Other ASX growth shares seeming more attractive to me.
