Australia's Adbri drops 20% as higher costs pressure hits half-year profit

Adbri

22/08/2022 05:08

Aug 22 (Reuters) - Shares of Australian Adbri Ltd  ABC.AX 
slid 20% on Monday, after the cement maker posted a sharp drop
in half-year profit hit by a rise in production costs amid high
inflation. 
    The firm, earlier known as Adelaide Brighton Cement, blamed
higher raw material, transport and fuel costs for a 15% decline
in statutory profit of A$48.1 million ($33.15 million) for the
six months ended June 30. Its shares hit their lowest level in
more that two years.
    Inflation in Australia is likely headed for a three-decade
high, with the central bank warning earlier this month that it
would need to hike interest rates further that would slow growth
sharply.  urn:newsml:reuters.com:*:nS9N2Y1011
    "The uncertainty in the current economic and operating
environment makes it difficult to provide quantitative guidance
at this time," the company said in a statement.
    While Adbri expects demand to stay strong from the
residential, infrastructure and mining sectors through the
second half of the fiscal year, it flagged a drag in building
and project completion time frames due to materials and labour
shortages.
    "Softness in retail spending is expected to impact masonry
demand, with increased interest rates impacting household
discretionary spend," it added.
    Analysts at both UBS and Jefferies said that cost headwinds
are likely to affect the company in the second half of the
financial year. 
    Wet weather conditions in New South Wales and Queensland
through the period also hampered its margins. The company
reported an 8% increase in revenue to A$812.4 million. 

($1 = 1.4510 Australian dollars)

 (Reporting by Archishma Iyer in Bengaluru; Editing by Rashmi
Aich)
 ((Archishma.Iyer@thomsonreuters.com;))