CSR to close Viridian glass business

Building products maker CSR says it will close manufacturing lines in Melbourne, with redundancies, and restructure its Viridian glass business to cope with the challenging business environment.

CSR says it now expects Viridian to make a pre-tax loss of $6 million to $8 million in the six months to September 30, 2011.

That was due to further deterioration in commercial and residential construction, together with record rises in the Australian dollar, which continued to impact the performance of Viridian, the company said.

"In response to these challenges, Viridian will restructure its float glass and bulk laminate manufacturing operations, a process which will be completed over the remainder of this financial year," CSR said in a statement on Thursday.

Australian manufacturing activity contracted further in August, down 0.1 points, according to the Australian Performance of Manufacturing Index released on Thursday.

Shares in CSR fell sharply at the open, down 12 cents, or 4.63 per cent, to $2.47 by 8.40am.

Under the restructure, which is expected to deliver around $10 million in annual savings, Viridian will invest in a new laminating line at Dandenong and close the current lines at Dandenong and Clayton.

Viridian will also cease production of uneconomical products at Dandenong and Ingleburn and alternatively source these products.

The restructure is expected to cost the company $22 million, including $12 million in capital and $10 million in one-off restructuring costs - including redundancies.

CSR also said on Thursday it expects earnings, before interest and tax, of $90 to $100 million for the six months to September 2011.

The company forecast net profit after tax, excluding significant items, and earnings per share to be 10 per cent higher than the prior corresponding period.

"CSR's Aluminium business has also been affected by the recent lower US$ aluminium price, combined with the consistently high Australian dollar," the company said.

As a result EBIT for Gove Aluminium Finance, 70 per cent owned by CSR, is expected to be in the range of $42 to $45 million for the first half of this financial year, assuming no material changes to currency and aluminium prices.

CSR said its other building products businesses continue to perform to expectations.