Consol lifts earnings glass

Glass company Consol (CSL) on Monday reported a 4.6% increase in headline earnings per share to 109.7c for the financial year ended June 2005 from 104.9c.

A final dividend of 39c per share was declared. Revenue increased 6.1% to R2.2bn, while gross profit rose to R830.7m from R774.2m.

Operating profit increased by 6.3% to R509.2m and the operating profit margin - at 22.7% - was in line with the prior year of 22.6%.

Consol MD Mike Arnold said the results were "pleasing" following from a positive consumer market and a strong operational performance.

Revenue from the glass division grew 5.9% to R1.98bn from R1.869bn rand, while plastics division contributed R265.5m in revenues, or 7.2% higher than last year's.

During the period Consol adopted the International Financial Reporting Standards (IFRS). Among other changes as a result of the introduction of the IFRS, Consol has depreciated idle assets.

Consol said to complement organic growth in existing markets, it aims to pursue new business in a number of high growth consumer packaging and related industries.

The opportunities identified include African markets, speciality plastic and glass packaging, and glass tableware.

In March Consol installed a further 15 000 tons of capacity at Bellville with the rebuild of the number three furnace and in September last year 10 000 tons of capacity was added to the number four furnace at the CSG plant in Pretoria.

This brings total glass capacity to 620 000 tons per annum.

Additional glass capacity totalling 150 000 tons is planned to be commissioned over the next 18 months in the north and south to meet future demand.

This will be funded from the group's strong cash generation ability.

Looking ahead, Consol expects consumer demand to remain buoyant, in line with GDP growth. The company's key markets are anticipated to generate commensurate growth.

"Consumer demand is forecast to remain buoyant and consequently the food and beverage industries, our key markets, are expected to generate commensurate growth.

"To meet future demand additional glass capacity of 25% has been planned to be commissioned over the next 18 months. Within the current economic environment the Group is expected to achieve real earnings growth for the next year," he added.

600450 Consol lifts earnings glass
Date: 6 September 2005

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