Australia“s CSR will pay AUD 175 million to buy another glassmaker, as it builds up its glass operations to profit from the rising popularity of glass in architectural design and of energy-efficient …
Australia“s CSR will pay AUD 175 million to buy another glassmaker, as it builds up its glass operations to profit from the rising popularity of glass in architectural design and of energy-efficient glass products. The acquisition of Mathieson & Staff Glass (DMS), a privately owned, Victoria-based glass processor and distributor, follows the acquisition of Pilkington Australasia by the building material and sugar producer for AUD 690 million in June 2007. The glass operations will generate 20% of CSR“s overall earnings before interest and tax (EBIT) for the year ended March 2008, and almost 45% of building products EBIT, on a pro-forma basis. CSR chief executive Jerry Maycock said architects were keen to use glass as a building product and this was driving growth. “We have architects talking to us now about structural glass, where you use glass as part of the structure”, he said. “But probably more importantly, it is more around energy efficiency”. “There is a clear trend internationally towards energy-efficient glass, which is tinted glass”. “That high efficiency is definitely an additional growth driver, as is double-glazing, which uses twice as much glass per square metre of wall, with a push towards energy saving”. Most of the demand for glass comes from the residential building market, although commercial construction will gain about 50% of the market. Mr Maycock also sought to talk down speculation that CSR was preparing to sell its sugar operations, with a review of the company“s businesses more than halfway through. “In the very long term, we acknowledge that the present mix of businesses within CSR is a bit eclectic and we could certainly imagine that would change over time, but we don“t have any current intentions to do anything with the structure of the group”, he said. CSR recently said group earnings for fiscal 2008 would be 5% down on the previous year due to lower sugar prices and wet weather delays to cane crushing. Meanwhile, Mr Maycock said the integration of DMS and Pilkington would result in some job losses over time, although most workers at both firms were expected to continue. The combined cost savings from the two glass businesses would be at least AUD 33 million by May 2010. Melbourne-based DMS Glass employs 400 people and generated revenue of AUD 96 million in the most recent financial year. The existing senior management team will continue to lead the company.