Australia's Rinker profit up in first quarter

SYDNEY - Australian building materials maker Rinker Group Ltd said its quarterly net profit rose 14 per cent as its focus on the fast-growing US states of Florida, Arizona and Nevada paid off.

The company reaffirmed annual earnings guidance of between 13 and 21 per cent growth in earnings per share.

"Our cost reduction programme, together with ongoing price increases and continuing solid construction demand in our major states, should lift profitability in line with our previous guidance, which remains unchanged," Rinker Chief Executive David Clarke said in a statement posted on the company's website.

The guidance for earnings per share of 84 to 90 US cents excludes one-off gains and the impact of a capital return and share buy back.

Before the statement was released, eight analysts on average expected earnings per share of around 94 US cents for 2007. The company has a track record of giving conservative forecasts.

In the three months to June, Rinker's net profit was US$206 million ($336.3 million), up from US$181 million a year earlier.

Goldman Sachs JBWere had forecast a first-quarter profit of US$213.8 million for Rinker.

"The outlook for US construction activity remains positive," Clarke said.

"We are seeing a slowdown in housing in some areas, where house prices have increased dramatically due to heavy demand and supply constraints. This correction is needed and may have a significant impact in these areas. However, housing demand remains strong in other parts of our key states," he said.

Rinker said on Monday it would buy back up to 45 million of its own shares, or around 5 per cent of its stock, via the market over the next 12 months.

Rinker shares closed on Monday up 0.2 per cent at A$14.71, ($17.92) in a broader market down 0.2 per cent. The stock has shed a third of its value since peaking above A$22 in April.

- REUTERS