Construction materials firm Adelaide Brighton expects full year profit in 2014 to be similar to that of 2013.
Adelaide Brighton’s incoming chief executive, Martin Brydon, told shareholders at the company’s annual general meeting in Adelaide that excluding certain items, both first half net profit and full year net profit in 2014 would be similar to those of 2013.
“First half 2014 net profit after tax is expected to be similar to the same period in 2013, excluding a net restructuring charge of $9 million pre-tax and the impact of the Birkenhead production issues,” Mr Brydon said.
“Taking everything into account, and subject to market demand, full year 2014 net profit after tax is also expected to be similar to 2013, excluding the impact of the Birkenhead production issues and a net restructuring charge for the year of $4 million.”
Mr Bryon said the restructuring initiatives that have occurred in the first half of 2014 would provide a strong platform for the business and deliver benefits in the second half of 2014 and further significant savings in 2015.
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Adelaide Brighton booked a net profit of $151.1 million for the year to December 31, 2013.
Mr Brydon said demand for cement and clinker (lumps or nodules of cement) was expected to be similar to 2013.
Projects in Western Australia and the Northern Territory, and a recovery in the residential sector, should offset weakness in the non-residential sector and a fall in project demand in South Australia.
Lime sales volumes for 2014 were likely to fall about five per cent due to a major lime customer in the Northern Territory temporarily suspending operations, and gold mine closures.
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But improved pricing following the renewal of a lime supply contract with a major alumina producer is expected to contribute $5 million to annual earnings.
Operational problems at the Birkenhead kiln in South Australia following an annual planned shutdown in March, resulted in the loss of about 50,000 tonnes of production, which was expected to hit pre-tax profit by $4 million in the current half year.
Mr Brydon said management was renewing efforts to further cut costs across the group.
Restructuring initiatives were expected to cost $12 million pre-tax for the 2014 full year.
These initiatives were expected to generate savings of $8 million pre-tax in 2014 and $11 million per annum from 2015.
The removal of the carbon tax by July 1, 2014 could provide an after-tax benefit of around $2 million in 2014 compared to 2013.
But uncertainty around whether the tax would be repealed put this saving at risk.
Shares in Adelaide Brighton were 13 cents lower at $3.62 at 1140 AEST.
