GPG slams CSR board

Guinness Peat director Gary Weiss has launched a blistering attack on the board of CSR at the annual meeting this morning, saying the company's poor performance was a "sorry state of affairs" and that potentially earnings-boosting strategies put to it by Guinness Peat were not properly explored.

Dr Weiss read a series of financial statistics in his opening speech from the floor which showed that on earnings, dividends, interest cover and debt the company had severely underperformed over the past five years.

He also heavily criticised CSR's billion dollar acquisitions of the Viridian glass business, which was the result acquisitions in 2007 at the top of the market.

"There is no escaping the conclusion, chairman, that these were the wrong assets acquired at the wrong time, at the wrong price," Dr Weiss said.

Corporate raider Guinness Peat has a 5 percent stake in CSR.

Dr Weiss said CSR paid too much for its glass assets, they were acquired at the wrong time and were financed largely by debt.

"As a result CSR's gearing has increased dramatically thereby considerably weakening CSR's financial position overall and ultimately necessitating the  highly dilutive capital raising that occurred in November last year."

Earlier, CSR shareholders at the Sydney meeting were told the sugar, building materials and aluminium company expects group earnings before interest and tax  (EBIT) and before significant items will be slightly higher in 2010 than last year.
 
Addressing shareholders, CSR managing director Jerry Maycock said the first-half year remained challenging particularly for its building products and property division.
 
He said that assuming no substantial change to current market conditions, he expected similar earnings in building products and property, and that growth in sugar earnings was expected to outweigh slightly lower aluminium earnings.

CSR shares rose 3 cents, or 2 percent, in morning trade to A$1.55.

CSR in May reported a 17 percent fall in fiscal 2009 EBIT to A$320.1 million, as a deterioration in the residential and commercial property markets and a significant fall in the price of aluminium took their toll.
 
It was hoped CSR would also update shareholders this morning on its demerger proposal, unveiled last month, which will see its sugar business spun off from the rest of the group.

Analysts and fund managers are particularly keen to see how the new structures will work and how CSR's A$1.2 billion in debt will be split between the new businesses.
 
The demerger means Australia's largest sugar company, and the high-profile brand that gave CSR its name, will finally be freed from an unwieldly conglomerate that includes building supplies and other businesses.
 
No new update on the structure and demerger was given to shareholders at the meeting, with Mr Maycock saying there was still a lot of work ahead of the board.
 
It is planned the demerger will be completed by March 2010.
 
Returning to the trading environment, Mr Maycock said there were early signs of an improving landscape for the company.
 
It is expected that shareholders will push the board for more details, including Sir Ron Brierley's Guinness Peat Group which owns just under 5 percent of CSR and has been pushing for change at the company.

- © Fairfax NZ News