CSR Limited has experienced stronger than expectedtrading conditions during the past six months and expects both operatingprofit and net profit after tax for the year ended 31 March 2000 to besubstantially ahead of the corresponding figures for the previous year.
Both results are expected to be at record levels despitea lower earnings stream as a result of CSR’s divestment programme and thepredicted sharp fall in profit from sugar as a result of low world sugarprices.
Operating profit is around 15% ahead of last year.The result has been helped in particularby the continuing strong performance from CSR America and higher aluminiumprices.Net profit after tax will bemore than 30% higher, boosted by the one off impact of the projected lowercompany tax rate and non-taxable components of divestment proceeds.
UPDATE ON CSRALUMINIUM ASSETS
CSR has been reviewing divestment options for itsinterests in the Gove bauxite and alumina project in the Northern Territory andthe Tomago smelter in NSW.
CSR recently announced that a non binding heads ofagreement had been signed with Billiton Aluminium Australia Pty Ltd coveringCSR’s share of the Gove bauxite and alumina project.Due diligence is underway and is expectedto be completed as scheduled within the next month, prior to a formal offerbeing made by Billiton.
With regard to CSR’s interest in the Tomago smelter, theoffers received to date do not in our view justify the sale of this asset.
Since January, CSR has taken advantage of stronger metalprices and the weaker Australian dollar to lock in returns from the Tomagobusiness for the next two to three years at levels close to those achievedfor the whole of CSR’s aluminium business during the year ended March 1999*.Long term alumina supply arrangements havealso been put in place.
CSR will continue to explore any sale options for theTomago asset that make sense for CSR shareholders.In the meantime shareholders will continue to benefit fromTomago’s profit performance which is significantly ahead of what has beenachieved at any time in the last decade.
*The combined GAF and GAL result in YEM99was $125 million EBIT.