Australia's CSR Year Profit Falls 20%

CSR, an Australian conglomerate, reported a 20 percent slide in annual profit, hit by a drop in sugar prices, but beat analysts forecasts and said it expected stronger earnings in its biggest
arm, building products.

CSR, Australia's top sugar producer which also makes glass and aluminum and has a property business, reiterated it did not expect to break itself up in the near term.

The group said it expected higher earnings before interest and tax from building materials in the year to March 2009, helped by cost cuts, but warned the outlook for a home-building recovery in the key state of New South Wales was very uncertain.

The company said net profit for the year to end-March before significant items fell to A$192.8 million ($182 million) from A$240.5 million before one-offs a year earlier.

Seven analysts on average had expected a net profit of A$181 million, according to Reuters Estimates.

It expected sugar earnings also to grow this year, assuming weather conditions would be reasonable for milling, sugar prices would not fall and the Australian dollar did not strengthen further.

However it said earnings from aluminum were likely to be flat this year, due to a sharp rise in production costs, and flagged lower earnings from its small property arm.

Analysts were forecasting a 22 percent increase in earnings before interest tax in 2009, according to Reuters Estimates. Credit Suisse warned ahead of the result that analysts were likely to have to cut forecasts for 2009 by 10 percent.

Earnings before interest and tax fell 5 percent, in line with the company's forecast, but net profit fell harder as its interest costs nearly doubled.

Building products earnings, excluding glass, jumped 16 percent, boosted by new products and a restructuring of the group's bricks and roofing businesses. Including the acquisition of Pilkington glass, building products earnings jumped 75 percent to A$148 million.

Sugar earnings slumped 45 percent, following a 15 percent drop in the average raw sugar price to A$300 a ton.

Shares in CSR have fallen 4.5 percent so far this year against an 8.3 percent fall in the broader market.