Results for the half year ended 30 September 2003


  • Earnings before interestand tax (EBIT) were maintained at similar levels to the same period last year following improved performance from Aluminium offset by a reduction in CSR Sugar earnings and a steady performance by CSR Building Products.

  • Net profit after tax of$100.0 million and earnings per share of 10.6 cents.

  • Interim dividend: 5 cents per share with franking maintained at 70%.The final dividend for the year ending 31 March 2004 is expected to match the six cents a share paid last year.

  • Low risk growth projects announced – including a $100 million renewable energy project at Pioneer raw sugar mill and a $75.7 million share of an upgrade of the Tomago aluminiumsmelter.

  • Initiatives under way to further reduce corporate and divisional overhead costs by over $15 million ayear.

Key facts

Half year ended 30 September [$ million unless stated]


2002 1

% change

Trading revenue




Earnings before interest, tax, depreciation, amortisation and significant items – EBITDA




Earnings before interest, tax and significant items – EBIT




Net profit




Earnings per share [cents]







Net operating cash flow




Funds employed




Key measures




EBITDA/trading revenue [%]




EBIT/trading revenue [%]




Return on funds employed [%] 2




As at

30 September 2003

31 March 2003

Gearing – net debt / net debt + equity [%]




  1. The previous period resultsshown here exclude the Rinker Materials Corporation and Readymix businessesdemerged from CSR on 28 March 2003.Corporate costs have also been adjusted to reflect the demerger.

  2. Based on past 12 monthsEBIT divided by funds employed as at 30 September.


“CSR has delivered a satisfactory half year result and madegood progress on a number of initiatives since the successful demerger ofRinker Group Limited earlier this year.These initiatives include: improving the company’s already strongbalance sheet through increased cash generation, lifting factory efficienciesand customer service, and committing $176 million to launch two growthprojects to create value from surplus cash flow,” said Managing Director andCEO Alec Brennan.

“CSR is also further streamlining its overheadstructure beyond the reductions made at the time of the demerger.Ongoing annual savings of over $15 millionare expected but we will incur some one off restructuring costs this year,” MrBrennan said.

Financial review

CSR’s financial position remains strong with net debtat 30 September 2003 reduced to $161 million, down 29% from $226 million at 31March 2003.Gearing (net debt/net debtplus equity) of 11.8% is well down from the already modest rate of 16.4% atMarch 2003.

In May 2003, CSR announced a buyback of up to 5% ofits shares.To date, no shares havebeen purchased under this program, however the buyback period extends to June2004.CSR will continue to explorecapital management opportunities for maximising shareholder returns.

Interim dividend

The directors have declared aninterim dividend of 5 cents a share, payable on 15 December 2003.Franking has been maintained at 70%. The final dividend for the year ending 31March 2004 is expected to remain at six cents a share, bringing the totalexpected dividend for the year to 11 cents a share.The company is confident of returning to full franking nextyear.

Review of results by segment

EBIT by segment

Half year ended 30 September

[$ million unless stated]



% change

CSR Building Products








CSR Sugar

- Milling


42.1 1


- Refining, Ethanol








Corporate costs


-10.9 2






Restructure and provisions 3




Total EBIT




  1. Based on a sugar price of $250 a tonne assumed for the half year ended 30 September 2002.Final price for the financial year ended 31March 2003 was $274 a tonne.

  2. Based on normalised costsassumed in the demerger scheme booklet dated 7 February 2003.

  3. Includes product liability and superannuation costsoffset by minor write back of provisions.

CSR Building Products – Improved prices in all products

Revenueof $462.6 million was in line with the same period last year despite a drop of 9.6%in detached residential housing starts.EBIT decreased to $59.2 million from $63.2 million in the sameperiod last year.Price increases wereachieved in most products.Costs of theextended commissioning of the Rosehill, Sydney, concrete roof tile plantnegatively impacted results.

Aluminium – EBITup 19.1%

Aluminium EBIT rose by 19.1% to$72.8 million on 3.8% higher revenues of $223.9 million.Volume sold increased 2.3% to 81,782 tonnesas Tomago marginally increased production.Favourable aluminiumprice and currency hedging improved the EBIT margin to 32.7% from 28.5%.Revenues from aluminium continue to beunderpinned by significant hedging positions.

CSRSugar – Difficult conditions as global prices remain depressed

CSR Sugar Milling EBIT fell 9.7% to $38.0 million on revenue of $392million.Sugarcane milled rose 1.9% to9.8 million tonnes due to improved milling rates and a solid crop in theBurdekin River region of Queensland.World raw sugar prices remained depressed and are well below historicalaverages.

Ethanol operations and the refined sugar joint ventures (50% CSR) alsoexperienced difficult market conditions – with reduced demand from most marketsegments – resulting in an EBIT of $10.7 million, down from $17.2 millionin the same period last year.

Delivering low risk growth allied to existing businesses

Expansion of Aluminium operations

Gove Aluminium Finance Limited (GAF, 70% CSR) has todaycommitted to invest $75.7 million as its share of a low capital cost expansion project to upgrade the Tomagoaluminium smelter to Pechiney AP22technology.GAF holds a 36.05% interestin the Tomago smelter, near Newcastle, New South Wales.Thisinvestment is expected to generate attractive additional returns forCSR.Tomago is to increase its total yearly production by70,000 tonnes to 530,000 tonnes at an estimated cost of $210 million.The expansion will begindelivering extra aluminium in calendar year 2004 and progressively increaseproduction until full capacity is reached in about three years.

$100 million renewable energy project under way at Pioneer raw sugar mill

In early September 2003, CSRannounced that it is to become one of Australia’s largest producers of newrenewable energy with a $100 million investment in a 63 megawatt electricityplant at the Pioneer raw sugar mill in the Burdekin River District, south ofTownsville.Electricity generation isfuelled by sugarcane waste fibre produced in the milling process.The project is expected to produceattractive returns above its cost of capital from the first year ofoperation.Similar projects at threeother mills are currently under consideration.

Further streamlining of cost structure

CSR has been progressively downsizing following the demerger of RinkerGroup Limited and has commenced further streamlining of corporate anddivisional overheads and services functions.This process is expected to be mainly completed by year end and producesavings of over $15 million per year.This will require a one-off charge of up to $10 million for the yearending 31 March 2004.

Outlook for the full year to March 2004

CSR Building Products – Theresidential housing market outlook is currently expected to continue atsatisfactory levels in the near term, although building activity is likely tobe below last year.The reduction insales volume should be largely offset by price increases initiated earlier thisyear.Prices are expected to begenerally stable despite strong competition in all product categories.

Aluminium– The result is expected to be stronger than last year although there will besome higher one-off costs at Tomago in the next six months.Revenue will continue to be underpinned byhedging.

CSR Sugar – The rawsugar pool price for the 2003-2004 season is currently expected to be in therange $230 to $250 per tonne, down from $274 per tonne in the financial yearended 31 March 2003.The total quantityof sugarcane milled by CSR is likely to be slightly above last year.Demand is expected to continue to be weakfor refined sugar although the market in the second half of the year shouldgenerally be stronger, with increased food and beverage production during thesummer months.CSR Sugar’s EBIT for thefull year to 31 March 2004 is expected to be in line with, or below, thehalf year result.

CSR overall – Giventhe weaker expected result for CSR Sugar and the continuing strong A$, theoperating result for the full year now looks likely to be at least 5% below lastyear, excluding the one-off restructuring charge.

The way ahead

CSR continuesto work hard to implement the strategy outlined at the time of the demerger, todevelop the strengths and performance of its businesses and pursue low riskgrowth options.In the longer term, CSR’s diversifiedbusinesses – which have leadingmarket positions and strong cash flows – will underpin its ability to createvalue for shareholders.