Glass Industry

CSR to Buy Glass Company for $175M

CSR Ltd will pay $175 million to acquire another glass maker, as it builds up its glass operations to cash in on the material's rising popularity in architectural design and energy efficiency benefits.

The acquisition of Mathieson & Staff Glass Pty Ltd (DMS) a privately owned Victoria-based glass processor and distributor, follows the building material and sugar producer's purchase of glass company Pilkington Australasia for $690 million in June. The glass operations will now generate 20 per cent of CSR's overall earnings before interest and tax (EBIT) for the year ended March 2008, and almost 45 per cent of building products EBIT, on a pro-forma basis.

CSR chief executive Jerry Maycock said designers were more keen to use glass as a building product and this was driving growth. "A lot of designers are making more use of glass as an architectural feature. We have architects talking to us now about structural glass, where you use glass as part of the structure as opposed to part of the facade, but probably more importantly, it is more around energy efficiency. A lot of glass in Australia and New Zealand is still relatively unsophisticated ... 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," Mr Maycock said.

Most of the demand for glass is expected to come from the residential construction market, although commercial construction will make up about 50 per cent the market of over time.

Mr Maycock also played down speculation that CSR was gearing up to sell off its sugar operations, with a review of the company's businesses more than half way 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 five per cent 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 will result in some job losses over time, although most workers in both companies are expected to stay on. The combined cost savings from the two glass businesses would be at least $33 million by May 2010. Based in Melbourne, DMS Glass employs 400 people and generated revenue of $96 million in the most recent financial year.

The existing senior management team will continue to lead the company.

Source: The Age