CSR Studying Plans To Demerge Sugar, Renewable Energy

The Sydney-based company is conducting due diligence on the creation of two separate listed companies, one for sugar and renewable energy and another for its building products, property and aluminum businesses, it said. The company is facing challenges from a softer Australian housing market, which is in its fifth year of decline, and construction levels below longer-term averages. The demerger will create a “focused, market leading sugar and renewable energy business with attractive growth options in sugar, renewable electricity and liquid fuel,” CSR said in a statement. Managing Director Jerry Maycock said CSR has been reviewing its portfolio for some time and preparing for the possible separation of its businesses. Improved earnings from its sugar unit on higher raw sugar prices and continued ethanol sales growth weren’t enough to offset the weak building market or decline in aluminum prices, Maycock said. In May, when CSR presented its annual results, Maycock said the longer-term trend for sugar prices was positive, supported by relative increase in Brazilian costs as its currency appreciated, increasing demand for Brazilian ethanol and on forecasts of global supply shortage from lower production in India and slower growth in Brazil. Its stock last traded Tuesday at A$1.50, down 15% in the year to date, compared with the broader market’s 6.5% gain in the same period. (June 17, 2009)