Building materials provider Adelaide Brighton is optimistic of increasing its full year earnings, despite the challenges facing the residential and commercial property markets.
The company posted a net profit of $67.5 million for the half year to June 30, an increase of 9.8 per cent from the previous corresponding period.
Managing director Mark Chellew said that subject to market conditions and cement sales, the company expects to record an annual net profit in the range of $145-155 million compared to the $148.4 million it reported for 2011.
“This is a solid result considering the difficult market conditions experienced in the first half of 2012,” Mr Chellew said in a statement on Thursday.
“Improved demand from the mining sector exceeded the combined impact of weak residential and commercial activity and wet weather across the eastern seaboard.”
The company said its residential and commercial businesses had been weaker than expected, and the Australian concrete market was expected to remain subdued for the rest of 2012.
However, demand from the mining sector fell within company expectations.
“The conditions in the residential market have deteriorated since March, and while we’re not in the position to comment on the movements of the Australian economy, hopefully we’ve reached the bottom,” Mr Chellew said.
Shares in Adelaide Brighton were down about 10 per cent in early afternoon trade, sliding 30 cents to $2.95 by 1424 AEST.
Morningstar equities analyst Nathan Zaia said the market was perhaps expecting a little more from the earnings report.
“The earnings number came in a little softer than expected,” Mr Zaia said.
“Profit outlook for the full year is in line with where market consensus is, although if you strip off the one-off benefits the number actually comes out a little weaker.”
During the half, Adelaide Brighton’s earnings were boosted by a $7.6 million gain relating to the finalisation of fair value accounting for 2011.
Meanwhile, the company expects the federal government’s carbon tax will hit the company’s annual profit by about $2.7 million.
Adelaide Brighton declared a full franked interim dividend of 7.5 cents a share.
