23 June, 2o17
Courtesy of the Australian
Building products supplier CSR expects a sharp jump in energy costs over the next year and has warned that Australian manufacturing businesses could face plant closures and job losses if the situation continues.
“There will be challenges in the year ahead, particularly as all of our businesses are facing higher energy costs,” CSR’s chairman Jeremy Sutcliffe told shareholders at the company’s annual general meeting.
“The increase in energy costs will be one that many businesses, including CSR, will find extremely hard to recover, notwithstanding efficiency gains and cost control.”
The company (CSR) has estimated the total energy bill for its main building products business will rise by 17 per cent from a year ago, to exceed $100 million in the next 12 months.
Its Viridian glass business will be particularly impacted as it faces strong import competition from exporting nations not facing similar energy cost imposts, he said.
“Manufacturing businesses across Australia face the real prospect of plant closures and job losses in high energy intensive industries if this situation continues,” Mr Sutcliffe said.
Despite the rising costs, CSR has outlined a strong earnings outlook, with earnings for the year to March 2018 expected to be higher than in the previous year.
Earnings would be helped by higher profits from the property division and benefits from hedging positions taken in aluminium, Mr Sutcliffe said.
The company has also used the improvement in short term aluminium pricing to increase its hedging position over the next three years, in an effort to reduce future earnings volatility.
Managing Director Rob Sindel said CSR was experiencing continuing solid demand from detached housing as well as high-rise construction projects currently underway on the east coast of Australia and New Zealand.
Mr Sutcliffe also announced he would step down before next year’s AGM, after serving on the board for around nine and a half years.
CSR will start the process of finding a replacement director and the board will then turn its attention to choosing a new chairman, he said.