CSR’s aluminium division witnesses stand out performance

CSR's building products arm reported an 18 per cent rise in revenue to $1.2 billion and a 31 per cent rise in earnings before interest and tax to $121 million.

The struggling Viridian glass division returned to profitability with EBIT of $3.1 million compared with last year's EBIT loss of $14.9 million.

However it was CSR's aluminium division, which owns a stake in the Tomago aluminium smelter, that was the standout achiever.

Revenue in aluminium rose 17 per cent to $533 million while EBIT soared 101 per cent to $104.3 million on the back of record premiums for delivery of physical aluminium in Asia.

"The building products business is starting to see some volume growth and there is pricing tension in the market, but it was actually aluminium that shot the lights out," Credit Suisse analyst Andrew Peros said.

But Mr Peros said there a lot of uncertainties that could impact CSR's earnings profile.

"There is increased plasterboard competition on the horizon with Knauf about to enter the market in Queensland, there is uncertainty around the aluminium premium, and there is uncertainty around the electricity contract negotiations for Tomago," he said.

There have been concerns in the market that declining aluminium premiums and a potential increase in Chinese exports could hurt CSR's aluminium business.

Mr Sindel that aluminium sales are 59 per cent hedged for the year ended March 2016 and the rise in the underlying aluminium price is offsetting the recent fall in the physical premium.

"We've controlled the things we can control such as our production at Tomago and our sales and marketing costs," he said.