Australian building materials maker Rinker Group posted a 6% rise in annual net profit, helped by price rises, but said uncertainty in U.S. housing markets would keep profits flat or push them lower in fiscal 2008.
Rinker , which has recommended a $14 billion takeover bid from Mexico's Cemex , said the company's long term fundamentals remained strong.
"However there is a high degree of uncertainty in regard to the timing and scale of the recovery in U.S. housing and particularly Florida housing, which makes short term profit guidance for Rinker difficult," Rinker Chief Executive David Clarke said in a statement.
A recovery in Arizona and Florida could see Rinker post a flat profit in fiscal 2008, but a continuation of the current depressed housing market could see underlying profit fall about 10%, he said.
The forecast followed a bleak outlook delivered in Mexico overnight by Cemex Chief Executive Lorenza Zambrano, who said the U.S. housing downturn would worsen in the short term. "We have not seen it hit bottom. There is not much visibility at this time to predict an improvement," Zambrano told reporters.
Rinker shareholders are yet to decide whether to accept Cemex's $15.85 a share bid for the Australian company which has 80% of its operations in the United States.
However, expectations of another tough year in the U.S. housing market could convince them to sell out to Cemex.
Rinker said its net profit rose to $782.4 million for the year to March 31, with trading revenue up 4% to $5.34 billion.
Earnings per share for the year came in at 86.9 U.S. cents, up eight percent and above the company's forecast of the bottom of an 84 U.S. cent to 90 U.S. cent range.
Rinker said price increases early in the year and more than $100 million in cost cuts helped offset a significant decline in residential construction in the United States.
Profit margins increased in all major segments but volumes were down in all product lines except asphalt.
The company booked a final dividend of 25 Australian cents, 50% franked, up 4%, pushing the total dividend for the year up 8% to 41 cents.