CSR shares plunge 14 per cent

Shares in CSR have plummeted after the company's annual earnings guidance missed expectations and the group warned that housing market conditions remain uncertain.

The building products, aluminium and sugar producer told its annual general meeting in Sydney that it expected group earnings to increase more than five per cent in fiscal 2009 - well below analysts' expectations of a rise of about 14 per cent.

CSR shares slumped on the cautious outlook, falling 13.85 per cent to $1.99 by 1511 AEST after hitting an earlier low of $1.92.

The Sydney-based company, which derives a third of its sales from building products, said the Australian housing market had softened in the past three months.

"It is clear in the last three months there has been a softening in the housing market outlook," CSR managing director Jerry Maycock told journalists after the AGM.

"NSW remains pretty soft as it has been for quite a while and we're seeing some reduction in confidence in Queensland - which had been one of the fast growing states."

"In Victoria, things are looking a little better but there is still some softening of sentiment."

Mr Maycock said weaker consumer confidence coupled with high interest rates were affecting the housing market.

However, CSR chairman Ian Blackburne said the company still had a strong platform for growth.

"Some of our core business sectors, such as

housing, continue to be challenging," he told shareholders.

"We are seeing clear signs of interest rate stress and loss of consumer confidence.

"Having said that, we are focused on the medium term and I believe CSR is establishing a strong platform for growth to continue to deliver value for shareholders."

Mr Maycock played down recent falls in CSR's share price, saying the decline had been part of an overall market trend.

"That is symptomatic of the general sentiment in the sharemarket where people are very sensitive to anything they perceive as bad news and there tends to be overreaction," he said.

Mr Maycock said CSR did not expect to break itself up in the near term.

"We're only going to do that if it creates additional value for shareholders, and right now we don't see that as being the case."

He said the company was focusing on developing its new glass business, Viridian, and developing its ethanol business that uses sugar cane waste as

a feedstock.

Mr Maycock told shareholders earlier that said like-for-like earnings from the building products division were expected to be ahead of its 2007 fiscal year, but cautioned that the housing market conditions remain uncertain.

CSR, which is Australia's largest sugar company, said earnings before interest and tax(EBIT) from the sugar unit were expected to be higher than last year, based on average weather and current raw sugar prices.

Aluminium EBIT is projected to be slightly lower than last year.

CSR, which has a reporting year ending March, posted a net profit of $177.4 million for its fiscal 2008.

The result was down 35 per cent on the previous corresponding year and was affected by weaker world raw sugar prices and unprecedented wet

weather in Queensland.