Adelaide Brighton records 15.9% decrease in net profit

Byrebecca3360

Updated Mon, 01 Sep 2014 09:46:53 GMT

Financial highlights (half year ended 30 June 2014)

Adelaide Brighton Limited reported net profit after tax of AUS$51.2 million for the half year ended 30 June 2014, a decrease of 15.9% compared to the previous corresponding period.

Revenue of AUS$602 million was 3.9% higher than the six months ended 30 June 2013 due to improved pricing and increased demand from the residential sector on the eastern seaboard offsetting a decline in project volumes in South Australia and a reduction in the volume of lime sold.

Earnings before interest and tax (EBIT) decreased by 12.6% to AUS$78.3 million.

Underlying EBIT of AUS$92.5 million was in line with the prior year. The underlying EBIT margin declined from 16% to 15.4% compared to the previous year due to higher input costs, particularly energy, and a decline in contribution from joint ventures due to weakening demand in some downstream markets.

Cement sales

Sales volumes improved in New South Wales and Queensland driven by a residential recovery and in the Northern Territory due to increased demand in the resources sector. Sales volumes declined in Victoria due to market weakness and competitive pressures. South Australia sales volumes also declined slightly due to reduced demand from major infrastructure and health projects. Sales to major resource projects in Western Australia were stable, despite delays due to high rainfall in the early months of the year.

Overall cement and clinker sales volumes decreased by 1.9% versus the prior corresponding period. Overall sales volumes to major resources and infrastructure projects in WA, SA and NT were similar to the same period a year earlier.

Cement operations

The rationalisation of clinker production at the Munster site has been highly successful with annualised pre-tax benefits expected to reach AUS$5 million. Production of general purpose clinker stopped in February 2014, with ongoing production restricted to specialty clinker products. Subject to all regulatory and supply chain arrangements being in place, clinker production at the Munster site will cease by the end of 2014.

Major planned maintenance during the first half of 2014 and production issues at the Birkenhead cement works resulted in a reduction of around 50 000 t of production, negatively impacting pre-tax earnings by circa AUS$4 million. These issues were fully resolved during the first half.