Despite a weaker first half, Adelaide Brighton Ltd, a leading Australian cement and lime manufacturer, says it expects its full year profit to be in line with its calendar 2010 result.
The company recently reported a net profit after tax of AUS$151.5 million for the year ending 31 December, and remains confident there are good opportunities for long-term growth for shareholder returns despite varied and uneven economic conditions.
Higher selling prices, management of costs and improved import margins supported by the stronger Australian dollar have all been cited as reasons for the 16.7% increase in earnings before interest and tax to AUS$216.2 million.
Mark Chellew, the managing director said the strong Australian dollar was expected to continue having a positive effect on the margins of imported products but created a risk of greater competition from imports.
"At present we expect first half 2011 net profit after tax to be weaker than that in the first half of 2010," Mr Chellew said at the company's annual general meeting in Sydney.
"However, along with the price increases in our lime business and expected recovery in the concrete and cement markets in South Australia and Western Australia in the second half, due to the timing of projects, we expect net profit after tax for 2011 to be similar to 2010."
The managing director explained that the company’s weakness in the first half was due to the loss of contracted cement volume in Western Australia, the temporary shutdown of a major lime customer in the Northern Territory and maintenance programs being weighted to the first half.
The company states: "In 2011 we expect the national demand for cement and concrete volumes across Australia will be similar to last year, although there are a number of risks to the business."
Data from the Australian Bureau of Statistics showed the national ready-mixed market expanded by 1% in the year compared to the same period last year. Lime sales volumes were expected to be the same as in 2010 but the threat of small-scale imports into Western Australia continued, supported by the high Australian dollar.
Adelaide Brighton has announced plans to spend AUS$60 million to expand its major cement plant at Birkenhead in South Australia. The investment is expected to lead to an increase in earnings before interest and tax by between AUS$10–12 million pa and the estimated date for completion is set for early 2013.
The company is also to spend an extra AUS$34 million for two projects at the Munster kiln 6 in Western Australia to increase production capacity by 100 000 tpa.
Read the article online at: https://www.worldcement.com/asia-pacific-rim/19052011/adelaide_brighton_ltd_predicts_2011_full_year_results/