CSR Share Price Stumbles as CEO Concedes Sales Slump (ASX:CSR)

CSR Share Price - CSR Ltd Shares

Today was a first for building materials supplier CSR Ltd [ASX:CSR].

Rather than conduct a standard in-person AGM, they had to go digital. A scenario that I’m sure we’ll be seeing plenty more of over the coming months.

However, that wasn’t the biggest impact this pandemic has had on the company.

CEO Julie Coates revealed that sales have taken a hit in recent months. A result that will yield a 10% fall in net profit for the company.

That news has pushed the CSR share price 1.57% lower in trading today. An unsurprising but nonetheless unfortunate outcome for investors.

Property market is a concern for CSR

For Coates, the position has been something of a baptism of fire.

Having only taken the top job just nine months ago, she has had to weather a tough start.

Overall, demand for building products was down 3% in the first 11 weeks of CSR’s financial year. That is, from the 1 April onward.

And that’s just for the Australian market. When you add in NZ as well, demand is down 5%.

Now, given the fact that this happened in the midst of a pandemic, that might seem decent. After all, building can’t exactly go ahead if sites are in lockdown.

However, this decline was already anticipated by CSR. They had already counted on a mild slump coming into this new financial year. Even before COVID-19 became a major event.

This means that the real pain may be yet to come. As Coates made sure to note:

Current lead indicators such as new home sales in Australia during April and May are down 19%, compared to the same period last year. This provides some indication of lower activity expected later in the year due to the lag in demand for our products, noting there will also be benefit from announced government stimulus measures, but the timing and extent remains uncertain.

CSR still has some big challenges ahead of it. Though there may be some good opportunities as well if the right conditions are met.

Don’t count on a crash

For the most part, CSR will be hoping to see a strong rebound in property. Especially when it comes to new builds.

Whether that will be possible will rely upon demand for homes.

Luckily, that may not be as big a problem as many think.

Despite the uncertainty, property as a whole may recover quite quickly. Avoiding the major downturn that some are predicting.

In fact, the ‘big crash’ that is often talked about may still be years away.

According to Catherine Cashmore, the cycle won’t hit the bottom until 2026. Meaning we could see another five-year long boom ahead of us. Read all about it, in our full report, right here.

For this reason, CSR may have its hardships right now, but long-term the outlook could be good. It will all depend on just how quickly the building sector as a whole can rebound.


Ryan Clarkson-Ledward,
For Profit Watch