Adelaide Brighton has produced a record yearly revenue, thanks to its capital expenditure program. The company’s revenue for the year to December 31 was up 3.8 per cent on the previous corresponding period, to a record $1.23 billion.
The company?s $112 million investment program to improve efficiency, sustainability and environmental performance in the cement and lime business made a significant contribution to the $20.2 million in operational improvements delivered in 2013.
During the year, Adelaide Brighton achieved $6.5 million in surplus land sales from a 10-year program expected to release $130 million in shareholder value.
Adelaide Brighton managing director Mark Chellew said the company is starting to see returns from its capex program in cement and lime. Given subdued volume growth in 2012, the company was yet to realise the full extent of the investment.
“Modest growth in underlying net profit on healthy sales is encouraging given we are yet to see the full benefit to revenue and margins of our major capex program and the recovery of residential demand has only just begun,” Chellew said.
“Adelaide Brighton’s cement and lime exposure to resources and infrastructure again supported shareholder returns, despite commercial and residential building activity being weak for much of the year.”
Demand from the housing sector improved in most markets led by strength in the multi-residential sector in Sydney. Aggregate sales volumes declined marginally as sales to sections of the Pacific Highway upgrade were delayed until late in the year and into 2014. Returns from the Austen Quarry in New South Wales continued to improve with better pricing and volumes increasing in line with the market.
?Adelaide Brighton anticipates demand for cement and clinker in 2014 to be similar to 2013 levels,? Chellew forecast. ?Demand from projects in Western Australia and the Northern Territory, and a recovery in the residential sector is expected to balance continued weakness in the non-residential sector and a decline in project demand in South Australia. In particular, we hope to consolidate returns from the cement mill upgrade at Birkenhead in South Australia, which were only partly realised in 2013.?
Carbon price impact
Chellew reported that the impact of the carbon tax in 2013 was $4.2 million after tax. ?The removal of the carbon tax by 1 July, 2014 could provide an after tax benefit of circa $2 million compared to 2013,” Chellew added. “However there is political uncertainty around the repeal process and a significant component of these savings are dependent on a reduction in energy costs from suppliers.”
In February 2014, directors of Adelaide Brighton approved a strategy to rationalise the production of clinker at its Munster site in Western Australia. The proposal is to reduce the volume of clinker being produced at the site in 2014 and that by 2016 all 400,000 tonnes of clinker will be imported clinker which will be milled into cement utilising the Kwinana import facility and Munster?s existing cement mills.
Sources: Adelaide Brighton, AAP, news.com.au