CSR: restructuring possible as profit slumps

CSR Ltd, which has cut 400 jobs from its building products division over the past year, says it continues to review the business as demand softens.
Tight credit conditions and falling demand are lead…

CSR Ltd, which has cut 400 jobs from its building products division over the past year, says it continues to review the business as demand softens. Tight credit conditions and falling demand are leading to fewer construction projects, as building approvals drop and the federal government cuts Australia“s growth forecasts. CSR chief executive Jerry Maycock declined to put a figure on potential future job cuts from the building products division, saying it would depend on how the market changes. “On the down side we“ve got the thread of unemployment and the general economic malaise, which is worrying people”, Mr Maycock told ABC Television. “On the the other side, you“ve got an easing interest rate environment and you“ve got the government stimulus package, which is encouraging first home owners. “So we need to see how all that plays out”. The building products, sugar and aluminium producer in early November 2008 posted a 51% fall in 1H net profit to AUD 32.9 million, from AUD 67.5 million in the prior corresponding period. The result was hit by a AUD 48 million increase in its asbestos liability provision due to a weaker Australian dollar, and higher finance costs relating to its glass business acquisitions. Mr Maycock repeated that a restructuring of its business would deliver better value but the current housing market downturn and general market volatility prevents it from acting in the short-term. “We“ve done a lot of work over the last six months on modelling the business in different configurations and I think we have concluded that we can foresee creating additional value by restructuring the assets”, Mr Maycock said. “The problem is of course that the present economic circumstances would make that particularly challenging to execute”.