CSR has posted strong half year earnings and an upbeat outlook on demand, putting to rest market worries of a peak in the housing construction boom.
The building products maker on Wednesday said continuing growth in building approvals had allowed it to raise prices and improve margins, helping lift profits 13 per cent in the six months to September.
The company said it sees no signs of a slowdown in construction over the medium term and committed to a sharp full year profit increase.
Shares in the company jumped after the comments, rising as much as 14 per cent in early trade before closing 12 cents higher at $3.03.
"Given recent building approvals and financing data, as well as feedback from major customers, we expect robust demand for our products will continue over the medium term," managing director Rob Sindel said.
CSR now expects full year net profit to be near the top of analyst forecasts that range between $128 million and $162 million.
That would imply a more than 25 per cent increase over its 2014/15 profit of $125.5 million, which itself had been the company's best return in five years.
"Their outlook on continuing demand is quite constructive, because we have seen tapering in building approvals recently," CMC Markets chief analyst Ric Spooner said.
"A lot of people were working on the assumption that a peak in construction is within sight."
Earlier this week, Australian Bureau of Statistics data showed building approvals rose 2.2 per cent in September, making only a partial recovery from the 9.5 per cent fall in August.
So far this year, every monthly gain has been followed by a fall the following month.
"The approvals in multi-residential housing are continuing to increase, although detached housing has stabilised," Mr Sindel said. "Longer lead times to construction means building completions are just catching up."
CSR said its half year net profit had increased to $77.6 million. Excluding significant items, the result was 32 per cent higher at $92.4 million.
It said growth was driven by gains in its two main divisions - building products and aluminium.
Earnings in the building products division, which accounts for about 60 per cent of revenue, rose 42 per cent from a year ago, with margins at the highest level in 10 years.
The aluminium business, which contributes a quarter of revenues, also saw earnings jump by a third, helped by a weaker Australian dollar and lower operating costs.
BUILDING BOOM FUELS CSR COFFERS
* Net profit $77.6m, up 13pct from year ago
* Net profit before significant items $92.4m, up 32pct
* Revenue $1.1b, up 14pct
* Interim dividend of 11.5 cents per share, up three cents.
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