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Adbri results warn of fall in concrete confidence

 

Adbri has achieved strong results in the first half of 2021, but anticipates the second half results will be impacted by reduced production, increased industry competition and COVID-19 restrictions.

A leader in construction materials and lime production, Adbri secured three-year contracts in the first half of 2021 for the supply of lime to Northern Star and Newmont.

In addition, discussions are underway with Alcoa to supply the Wagerup facility in Western Australia until the end of January 2022.

However, chief executive officer Nick Miller made clear the obstacles ahead in FY2021-22.

“Sales volumes in July and August have been in line with or ahead of expectations across all markets, except New South Wales and South Australia, due to lockdowns,” Miller said.

“However, earnings in the second half will be impacted by a reduction in lime volumes to Alcoa, the anticipated commencement of a competing cement import terminal in NSW and COVID-19 impacts, including limitations on construction activity and increased costs caused by the delayed return of the Accolade from its drydock in Singapore.”

For the first half, cement and clinker sales volumes were up 10.6 per cent on the first half of 2020, lime sales volumes were up 3.4 per cent and concrete sales volumes increased by 7.1 per cent.

These results were inconsistent across Australia, however, with Victorian concrete sales, for example, dropping 13.5 per cent due to delayed start-up of some residential projects.

Miller said in the long-term, Adbri would find a way to capitalise, as long as State and Federal Governments played their part in the recovery.

“We remain well positioned to benefit from increasing construction activity as a result of ongoing government stimulus, while navigating continued uncertainty from the Delta strain of COVID-19,” Miller said.

Despite Miller’s concluding attempt at building long-term positivity, Adbri lost 18 cents (-5.19 per cent) on the Australian Stock Exchange (ASX) in the two days after the results announcement.

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