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CSR Limited

CSR Limited


Level 1, 9 Help Street
Chatswood, New South Wales 2067
Australia
Telephone: (+61 2) 9235 8000
Fax: (+61 2) 9235 8044
Web site: http://www.csr.com.au

Public Company
Founded: 1855 as The Colonial Sugar Refining Company
Incorporated: 1887 as The Colonial Sugar Refining Company Limited
Employees: 6,363
Sales: AUD 2.87 billion ($2.05 billion) (2006)
Stock Exchanges: Australian
Ticker Symbol: CSR
NAIC: 311311 Sugar Cane Mills; 311312 Cane Sugar Refining; 325193 Ethyl Alcohol Manufacturing; 327121 Brick and Structural Clay Tile Manufacturing; 327123 Other Structural Clay Product Manufacturing; 327331 Concrete Block and Brick Manufacturing; 327390 Other Concrete Product Manufacturing; 327420 Gypsum Product Manufacturing; 327990 All Other Nonmetallic Mineral Product Manufacturing; 327993 Mineral Wool Manufacturing; 331311 Alumina Refining; 331312 Primary Aluminum Production

CSR Limited is a conglomerate operating throughout Australia and in Asia and New Zealand as well, with three main business areas: building materials, sugar, and aluminum. In building materials, which generates about one-third of total revenues, CSR produces insulation products, panel systems, building boards, gypsum-based plasterboard, lightweight concrete panels and beams, concrete and clay roof tiles, and clay bricks and pavers. The largest sugar company in Australia, CSR produces about 40 percent of the nation's raw sugar, a business that is responsible for approximately 26 percent of the company's revenues. CSR's sugar refining and ethanol production operations account for another 21 percent of revenues. The company holds 75 percent stakes in refined sugar joint ventures that are leading suppliers in both Australia and New Zealand, and CSR ranks as Australia's leading manufacturer of ethanol products. CSR generates about 18 percent of its revenues from its indirectly held 25 percent stake in Tomago Aluminium Company Pty. Limited, the second largest producer of aluminum in Australia. Originally established in 1855 to refine sugar, CSR is one of Australia's oldest companies.

EARLY HISTORY

The Colonial Sugar Refining Company (CSR) was formed as a partnership in January 1855 under the chairmanship of Edward Knox, an ambitious 35-year-old entrepreneur. Having acquired some of the assets of the defunct Australasian Sugar Company, the partnership bought the Brisbane House sugar refinery in Sydney. Two years later, a new holding company, the Victoria Sugar Company, was formed jointly by CSR shareholders and Victorian business interests, and a sugar refinery and molasses distillery were set up at Port Melbourne. Later that year, Knox sold his house and some of his shares in the company and left for Europe by ship. Before he reached Europe, he was bombarded with letters telling him the company was ruined. Knox returned to Australia immediately.

The company underwent serious financial difficulties following the depression in the world sugar trade from 1857 to 1858. CSR countered the potentially disastrous effects of the depression by diversifying into raw sugar milling. By 1869 the company had built a number of new mills in northern New South Wales. With the construction of the Chatsworth, Southgate, and Darkwater mills CSR entered the sugar milling industry. Darkwater Mill has since been renamed Harwood Mill and is the oldest continually working sugar mill in Australia. Knox's second son, Edward William, was put in charge of the project.

The 1870s saw further diversification within the sugar industry. CSR had established a network of mills and refineries on the Queensland coast and the purchase of a small freight ship, SS Keera, in 1873 gave the company an entry into the coastal shipping business. In 1874 the Victoria Sugar Company's refinery in Melbourne was destroyed by fire and then replaced by the newly built Joshua Brothers' refinery.

CSR continued its program of expansion throughout the next decade. On his retirement, Knox handed over management of the company to his son, writing to a friend, "I can only expect to leave a kind of smeary, sugary track behind me." Edward William Knox was an impetuous and autocratic manager, anxious to emulate his father's success. The milling operations were extended to Queensland, where new mills had been constructed in the early 1880s. In 1882 CSR embarked on its first overseas project, building a mill in Nausori, Fiji. The following year CSR formed the New Zealand Sugar Company to refine sugar in New Zealand, as an equal partnership with the Victoria Sugar Company and business interests in New Zealand. In the mid-1880s CSR's research team conducted the first sugarcane fertilizer trials.

1887 INCORPORATION

On July 1, 1887, CSR was amalgamated with the Victoria Sugar Company and was incorporated as a public company, The Colonial Sugar Refining Company Limited. The new company merged the following year with the New Zealand Sugar Company, and CSR was established as a leader in the Australian sugar industry. As the 19th century drew to a close, CSR continued to acquire mills along the Queensland coast and set up a new refinery in Brisbane. Administrative changes, designed to make management of the spreading company more efficient, were introduced in the early 1890s: sugarcane estates in Queensland were divided into small farms for leasing, with the rights of purchase, to cane growers. In 1899 the company's investment in research and development allowed it for the first time to buy cane on the basis of its analyzed sugar content. Other sugar companies were less advanced in the research and application of chemical analysis, and CSR's commitment to research undoubtedly assisted its domination of the domestic sugar industry. In 1904 the company bred Australia's first successful commercial variety of sugarcane, which it christened Clark's Seedling.

COMPANY PERSPECTIVES


CSR is focused on developing the strengths and performance of its three businesses to build value for our shareholders by: improving the performance of the group's operations, mainly by reducing costs and enhancing productivity; pursuing value-adding, low risk growth opportunities allied to existing businesses; identifying sensible industry restructuring and rationalisation opportunities. In addition, CSR's operations generate stable earnings and strong cash flows which support a significant and highly franked dividend policy for shareholders.

Further expansion took place in the early part of the 20th century. An expedition in 1908 to New Guinea to collect samples of sugarcane and thereby improve breeding of new cane varieties for commercial use, gave rise to better cane and sugar yields. Two years earlier several Fijian plantations had been sold to a group of company officers who wanted to work for themselves. As World War I approached, CSR continued to consolidate its refining and milling businesses and sent another cane-gathering party to New Guinea. Trade in Australia benefited from the increase in the British government's demand for sugar and resources after World War I. In 1923 the commonwealth government transferred control of the sugar industry to the Queensland government, and CSR made its first annual refining and marketing agreement with the government. The worldwide Great Depression of the 1930s was threatening, however, and a downturn in demand was anticipated. In 1933 Edward William Knox retired, four months before his death. His son, Edward Ritchie Knox, took over as general manager.

DIVERSIFYING INTO BUILDING MATERIALS AND CONSTRUCTION

The onset of World War II precipitated CSR's second major diversification. A pilot plant set up in 1936 to assess the feasibility of making wallboard from the residue fiber of crushed sugarcane provided CSR with what transpired to be a commercial method of disposing of its sugar millery byproducts. In 1939 CSR acquired shares in a chemicals plant in Sydney and opened a wallboard factory nearby, where the new product Cane-ite was produced. To meet the needs of the Australian war effort, CSR reduced its sugar-based production activities from 1939 onward to manufacture war-related materials. A new plaster mill was introduced in Sydney in 1942. Two years later CSR began mining asbestos when it acquired Australian Blue Asbestos's mine in Wittenoom, Western Australia.

Although CSR was known mainly as a sugar producer, the postwar program of diversification changed the corporate profile considerably. The last year of the war marked CSR's first substantial entry into building materials and construction when the company bought an interest in Fletcher Holdings, a large construction and timber company based in New Zealand. During the late 1940s CSR introduced new building products, plasterboard and floor tiles, and expanded its factory stock in Sydney. The wave of expansion culminated in the formation of a new wholly owned subsidiary, CSR Chemicals, in 1948.

Over the next ten years, under the directorship of Edward Ritchie Knox, CSR continued to expand. The company's sugar operations were extended and facilities for bulk-loading raw sugar were introduced at two of the original Queensland mills and later extended to cover all 12 mills. In 1955 CSR was appointed coordinator for the Australian sugar industry's conversion to bulk handling. From the mid-1950s on, the company increased its involvement in the building materials industry. The acquisition in 1959 of the Bradford Insulation Group gave CSR a major share of the insulation products market throughout Australia. In the same year, the CSR Chemicals subsidiary spawned two new subsidiaries and a new product, particleboard, was introduced. Developments at this time included the takeover of Masonite Holdings, which manufactured hardboard.

KEY DATES


1855:
The Colonial Sugar Refining Company (CSR) is formed as a partnership under the leadership of Edward Knox.
1857:
Victoria Sugar Company is formed as a holding company.
1869:
CSR diversifies into raw sugar milling.
1887:
CSR is amalgamated with Victoria Sugar and incorporated as a public company, The Colonial Sugar Refining Company Limited.
1936:
Company diversifies into building products through the beginning of wallboard production.
1940s:
Production of plasterboard and floor tiles commences.
1959:
CSR enters the insulation business through the acquisition of the Bradford Insulation Group.
1965:
With purchase of a 50 percent share of Readymix Concrete, CSR enters the concrete market.
1973:
Reflecting diversification, company is renamed CSR Limited.
1987:
CSR begins shift from a diversified resources and industrial group to a diversified manufacturing company in building and construction materials and sugar.
1988:
Company acquires the U.S.-based Rinker Materials Corporation.
1997:
A multiyear restructuring involving the divestment of numerous noncore businesses begins.
2000:
As part of a concerted push into the U.S. heavy construction materials sector, CSR acquires American Limestone Company and Florida Crushed Stone Holdings Inc.
2002:
Another heavy construction materials firm, Kiewit Materials Company, is acquired.
2003:
CSR spins off its heavy construction materials operations as Rinker Group Limited, reducing its focus to sugar, building materials, and aluminum.

The company opened new research centers in Brisbane in 1962 and in Sydney in 1963. The following year it joined American Metal Climax in a project to develop the Mount Newman iron ore deposits in Western Australia. From the mid-1960s until the early 1980s CSR increased its involvement in resources, including bauxite and alumina, tin, copper, coal, oil and gas, gold, aluminum, and minerals exploration. At the same time that CSR was increasing its investment in resources, it entered the concrete market for the first time. In 1965 it acquired a 50 percent share, with Blue Metal Industries, in Readymix Concrete.

The 1969 takeover of Wunderlich Ltd., a large manufacturer of roof tiles, asbestos cement products, and architectural metal products, gave CSR its first significant entry into the Australian roof tile industry. The business was subsequently sold in 1983 to Monier. In 1972 the Fijian government bought CSR's Fijian sugar mills, ending the company's 90-year involvement in the Fijian sugar industry.

The resource ventures begun in the 1960s, during Australia's mineral boom, continued throughout the 1970s. The company began to invest in alumina and bauxite; various gold, tin, and copper ventures; and later, coal, oil, and gas. Extensive investments in a number of established coal mines made in the 1970s proved unsuccessful. The prices of coal and oil dropped almost immediately after the acquisitions had been made, near the peak of the energy cycle. A large proportion of loans made for the acquisition of coal and oil assets were in U.S. dollars. The repayments of these loans increased significantly with the fall in the Australian dollar exchange rate from 1983 to 1984, coupled with falling energy prices.

NEW NAME, CSR LIMITED, IN 1973

To reflect its diversification, and in an effort to modernize its corporate identity, the company dropped "Colonial Sugar Refining Company" from its original name and in 1973 it became CSR Limited. In the following year CSR entered the cement industry through the joint acquisition, with Pioneer International, of Australian and Kandos Cement. The managerial difficulties CSR was experiencing with such diverse business interests forced a strategic reorganization. The sugar division was formed in 1974 and the mineral division and the building and construction materials division was formed the following year.

Further diversification took place in 1977, when CSR bought AAR Ltd., an exploration company with natural gas, oil, and drilling contracts. Thiess, a large coal company, was acquired in 1979. When the resources boom of the 1970s and early 1980s petered out, CSR was left with a debt and interest burden that made the company vulnerable to takeover bids. Investors had lost faith in the company and CSR share prices plummeted. The company was surviving in large part on the activities of the sugar and building materials divisions, but the drop in world sugar prices in the early to mid-1980s made the situation worse. Until the extensive management and corporate restructuring that began in 1985, CSR was a struggling company. Bryan Kelman became general manager in 1983.

In 1981 the company significantly increased its investment in the oil industry when it bought an Australian-based, U.S.-owned oil and petroleum producer, Delhi International Oil Corporation. The major investments in coal, and particularly oil, were badly timed. The Delhi acquisition was hit with falling oil prices, lack of new oil discoveries, and a falling Australian dollar, while carrying extensive debt in U.S. dollars. As a result, the company began a process of repaying much of its debt through the sale of iron ore and some coal assets. This was followed in 1987 with the sale of Delhi for $985 million, resulting in a loss of more than $600 million.

In 1985 sugar profits fell dramatically. Growing public concern about the health risks associated with sugar consumption and a slump in world prices hit CSR badly. In 1985 sugar was at its lowest price in 200 years. Many cane farmers were living below the poverty line and accused CSR of mismanaging the industry in which it played a dominant role.

SHIFTING AWAY FROM RESOURCES, TOWARD MANUFACTURING

In 1987 CSR began the process of changing the company from a diversified resources and industrial group to a diversified manufacturing company in building and construction materials and sugar, core activities in which the company had long years of experience, since 1855 in sugar and since 1936 in building materials. Between 1987 and 1989 the company sold more than $2 billion of low-yielding and loss-making assets in resources and reinvested these funds in building and construction materials and sugar operations, including large investments in the United States. By the end of the 1980s CSR had sold all of its interests in tin, gold, and mineral exploration, its coal mines, and its oil and gas interests. The head office in Sydney, where the company had been based for 106 years, also was sold to compensate for falling profits.

In addition, a more streamlined management structure was introduced. Ian Burgess took over as chief executive of CSR in 1987, and his ruthless approach to restructuring the flagging conglomerate was generally accepted as having saved CSR from takeover or collapse. Burgess had joined the company straight from school in 1950 and was anxious to change the antiquated management style. "It was a very conservative place," he told the Wall Street Journal on May 14, 1987, "you even had to get your wife approved. You had to go to your boss and say 'Please sir, can I get married?'" Under Burgess's guidance, each of CSR's divisions was transformed. The building materials division, for example, had employed 157 senior managers. After Burgess's reorganization, there were three. Burgess also dispensed with the CSR annual cricket match, a 94-year-old company tradition. By the end of 1989 the reorganization was complete.

The acquisition of the U.S. Rinker Materials Corporation in 1988 gave CSR a large proportion of the Florida concrete and quarry products market. In 1990 CSR acquired ARC America, a large quarry and concrete products operator with interests in 20 states including Ohio, Indiana, Michigan, Washington, California, Nevada, Texas, and Florida. By the end of 1990 the building and construction division made up 64 percent of total sales. CSR had grown into one of the largest quarrying and concrete operators in the United States and had more quarries there than in Australia. The same year CSR announced record profits. Against a background of high inflation rates and a weak Australian dollar in the mid-1980s, CSR's divestment policy appeared to have paid off. Further expansion in timber, when CSR bought Softwood Holdings in 1988, meant a quadrupling of profits for the timber products division. Despite slow growth in the construction industry, but with profits increasing by 65 percent in 1989, CSR began to focus on Europe and the United States for expansion. In 1987 the company bought a 49 percent share in Redland Plasterboard, a large British construction company with assets throughout Europe. Increasing competition in the United Kingdom and European plasterboard industry caused CSR to sell out its interest in 1990.

In 1989 controversy concerning the company's alleged negligence in its management of the Wittenoom asbestos mine, which it had sold in 1966, was settled. CSR paid out an estimated AUD 30 million in damages to more than 300 workers suffering from asbestos-related lung diseases. Australian newspapers referred to the event as "Australia's Bhopal."

A commercial development affecting CSR in the early 1990s was the deregulation of the domestic refined sugar industry, which began in 1989. CSR reassessed its refining capacity and locations in the face of greater competition, both from domestic sources and imports. Although profits as a commercial refiner were better than those earned as a toll refiner on behalf of the Queensland government, CSR lost about 20 percent of its market share within Australia; it stood at about 75 percent by mid-decade.

CSR continued its U.S. expansion in the 1990s, including the purchase of three U.S. building materials companies in 1996. By that time U.S. activities represented about one-third of CSR's total assets and 26 percent of its worldwide workforce. During the 1998 fiscal year more than 30 percent of CSR's revenues were derived from its North American operations and nearly 32 percent of its operating profit came from that continent.

With its North American operations continuing to grow, CSR also sought growth on another continent, that of Asia. With booming Asian markets located in CSR's own backyard, the company's growth there in the early and mid-1990s made much sense. Having already established a joint venture in Taiwan to build and operate a concrete products factory, CSR in 1994 formed a joint venture to supply premixed concrete in northern China, the company's first foray into that nation. Other joint ventures were formed in Hong Kong, Malaysia, Thailand, and Indonesia, with CSR entering the Asian market in four product areas: plasterboard, insulation materials, construction materials, and timber. In 1995 CSR combined its interests in these joint ventures within a new company called CSR Kuok Asia Ltd., which was 75 percent owned by CSR and 25 percent owned by the Kuok Group, an entity headed by Malaysian-Chinese businessman Robert Kuok. During fiscal 1998, however, CSR bought out the Kuok Group's interest and took full control of CSR Kuok Asia. From 1994 to 1997 CSR increased the number of plants it operated in Asia from two to 19. For the 1997 fiscal year, CSR's revenues from Asia increased more than 50 percent over the preceding year, reaching AUD 147 million. The Asian economic crisis that erupted during 1997 reversed this trend, however, as revenues from Asia for the 1998 fiscal year fell to AUD 132.8 million. That year CSR made no further investments in the region.

19972002: RESTRUCTURING AND BIG PUSH INTO U.S. CONSTRUCTION MATERIALS

From the mid-1990s into the late 1990s, CSR was seeing a steady increase in revenues but a declining trend in operating profits. The company concluded that it was being dragged down by a number of underperforming units and that it would be to the company's advantage to reduce its interests to a narrower core through restructuring. During fiscal 1997 CSR closed 38 "less efficient" plants and generated AUD 240 million from the sale of noncore assets. The following year CSR sold American Aggregates Corporation, a U.S.-based operator of quarries and crushed stone plants, to Martin Marietta Materials Inc. for about $235 million. Also during fiscal 1998 CSR took a AUD 398 million ($240 million) after-tax charge to write down the value of a number of underperforming units. This charge led to a net loss for the year of AUD 109.8 million ($66 million). During the early stages of this restructuring, a shift occurred in the top management. Burgess was named chairman in 1997, and the following year Peter Kirby was brought onboard as managing director. Kirby had previously spent 25 years at Imperial Chemical Industries plc, where he last served as CEO of ICI Paints.

CSR's restructuring efforts continued in 1999 and 2000. The company in March 1999 sold its contract mining and civil contracting businesses to Downer Group Limited for about AUD 135 million ($85 million). Later that spring CSR sold its South Australian and Victorian softwood plantations and sawmills to a U.S.-based timber partnership, RII Weyerhaeuser World Timberfund Pty. Ltd., for AUD 224 million ($142 million). CSR then completed its exit from the timber business via several additional deals in 2000. The company's medium-density fiberboard and particleboard operations and a sawmill in New South Wales were sold to Carter Holt Harvey Limited for AUD 330 million ($207 million), while two other sawmills and a 70 percent stake in Australia's largest softwood timber distributor were offloaded to Weyerhaeuser Company for AUD 87 million ($55 million).

Concurrent with these divestments, CSR made a sustained push into the U.S. heavy construction materials sector. Having already made more than $400 million in investments in heavy building materials and concrete pipe businesses in the United States since March 1998, CSR in mid-2000 acquired Tennessee-based American Limestone Company, a major aggregates and premixed concrete producer, from Grupo México S.A. de C.V. for $211 million. Also in 2000 CSR spent $348 million for the aggregates and cement company Florida Crushed Stone Holdings Inc. These two major deals were joined by a number of smaller ones through the year 2001, when CSR gave its main U.S. heavy construction materials subsidiary the name Rinker Materials Corporation. In September of the following year, CSR made its largest U.S. acquisition yet, the $540 million purchase of Kiewit Materials Company, a firm with major operations in aggregates, concrete, and asphalt in Arizona and other western U.S. states.

During this period, CSR appeared headed toward a future as an international building and construction materials company. For a protracted span of time, the company attempted to sell its sugar business and its interests in the aluminum industry. CSR failed, however, to find a buyer willing to make a substantial enough offer for the former, while the latter was only partially divested. In early 2001 CSR sold its share of an alumina and bauxite joint venture on Gove peninsula in Australia's Northern Territory to Alcan Aluminium Limited, but was forced to hold onto its 25 percent stake in the Tomago aluminum smelter in New South Wales.

2003 AND BEYOND: FOCUSING ON SUGAR, BUILDING PRODUCTS, AND ALUMINUM

By 2002 CSR's heavy construction materials businesses, including Rinker, were generating more than 70 percent of overall revenues and about three-quarters of earnings. Seeking to unlock more of the value of the company's disparate parts, CSR in November 2002 announced a plan to spin off Rinker, along with the Readymix and Humes concrete and concrete pipe businesses in Australia, into a separate company. At the end of March 2003 Rinker Group Limited was spun off from CSR with a listing on the Australian Stock Exchange. The much smaller CSR carried on with its sugar, aluminum, and residential-focused building products businesses in Australia, New Zealand, and Asia. Kirby retired when the demerger was completed. Taking over as managing director was Alec Brennan, who had been Kirby's deputy.

Despite skepticism from some quarters regarding the viability of CSR's hodgepodge of businesses, Brennan moved ahead with growth initiatives. In sugar, for example, the company boosted to 75 percent its stakes in the Sugar Australia Joint Venture and New Zealand Sugar Company Ltd., the respective leaders in refined sugar in the two nations, by buying Man Group plc's 25 percent interests for AUD 61 million in 2004. At the same time, in order to counter the volatility of the world sugar market, CSR was seeking to diversify its sugar business by ramping up its ethanol business (which dated back to 1901) and moving into renewable energy generation. The company produced ethanol by fermenting molasses, a byproduct of sugar production. It operated an ethanol production plant in Sarina, Queensland, and a processing and distribution plant in Melbourne, producing 50 percent of the ethanol used industrially in Australia. CSR also exported ethanol, mainly to Japan and the Philippines, where it was principally used to make alcoholic spirits. In 2006 the company expanded into the burgeoning ethanol fuel market by entering into a contract to supply ethanol to BP Australia toward the sale in Queensland of gasoline with a 10 percent blend of ethanol. CSR spent AUD 15 million on its Sarina distillery to increase its capacity to produce fuel-grade ethanol by 32 million liters.

In August 2005, meanwhile, production began at a new 63-megawatt renewable electricity plant at CSR's Pioneer raw sugar mill in North Queensland. Fueled by sugarcane waste fiber and constructed at a cost of more than AUD 140 million, the plant increased CSR's renewable energy capacity by 80 percent, to 620,000 megawatt hours a year, enough to supply the requirements of 100,000 households. CSR used the energy to power its sugar mills and sold the excess to the Queensland electricity grid.

During this same period, CSR's aluminum business was strengthened through a AUD 76 million upgrade to the Tomago smelter that increased its capacity by 15 percent. In building materials, CSR increased its operations in China and completed some smaller acquisitions in Australia, including the 2005 purchase of Karreman Roof Tile, a privately owned producer of concrete roof tiles based in Brisbane, Queensland. In 2005 and 2006 CSR made some cutbacks to its brick and roof tile manufacturing facilities as New South Wales experienced a 30-year low in residential construction.

By late 2006 there was much speculation in the press about the possibility of a private equity group taking over CSR and then subsequently breaking up the company. Brennan dismissed this talk, while acknowledging the possibility for further company restructuring. In particular, the CEO said that CSR was seeking to expand its sugar operations through acquisition opportunities in Brazil, by far the world's leading producer of sugar. The responsibility for overseeing the further evolution of CSR, which had celebrated its 150th anniversary in 2005, soon changed hands, however, as Brennan retired in early 2007. His successor was Jerry Maycock, who had served as managing director and CEO of Hastie Group Limited, which specialized in the installation and maintenance of large-scale commercial air-conditioning and refrigeration systems. Prior to his new two-year stint at the head of Hastie, Maycock had spent 21 years with the Swiss construction materials firm Holcim Ltd.

Juliette Bright

Updated, David E. Salamie

PRINCIPAL SUBSIDIARIES

Amalgamated Sugar Mills Pty Ltd; Bradford Insulation Industries Pty Ltd; Buchanan Borehole Collieries Pty Ltd; CSR Bradford Air (M) Sdn Bhd (Malaysia; 70%); CSR Building Materials (HK) Ltd (Hong Kong); CSR Building Materials (M) Sdn Bhd (Malaysia; 70%); CSR Building Products (NZ) Ltd (New Zealand); CSR Building Materials Trading (Shanghai) Co., Ltd (China); CSR Building Products Ltd; CSR Climate Control (M) Sdn Bhd (Malaysia; 70%); CSR Developments Pty Ltd; CSR Distilleries Operations Pty Ltd; CSR Ethanol Pty Ltd; CSR Finance Ltd; CSR Guangdong Glasswool Co., Ltd (China; 79%); CSR Industrial Property Master Trust; CSR Insulation (Thailand) Limited; CSR International Pty Ltd; CSR Plane Creek Pty Ltd; CSR South East Asia Pte Ltd (Singapore); CSR Sugar Pty Ltd; CSR Sugar (Herbert) Pty Ltd; CSR Sugar (Invicta) Pty Ltd; CSR Sugar (Kalamia) Pty Ltd; CSR (Guangzhou) Building Materials Co., Ltd (China); CSR (Guangdong) Rockwool Co., Ltd (China; 70%); CSR (Pioneer Sugar) Pty Ltd; Farley & Lewers Ltd; FEP Concrete Ltd; Gove Aluminium Finance Ltd (70%); Gyprock Holdings Pty Ltd; The Haughton Sugar Co Pty Ltd; Midalco Pty Ltd; New Zealand Sugar Company Ltd (75%); Pioneer Sugar Mills Pty Ltd; Premier Packers Ltd (New Zealand; 75%); PT Prima Karya Plasterboard (Indonesia); Refined Sugar Services Pty Ltd; Rivarol Pty Ltd; Seltsam Pty Ltd; Sugar Australia Joint Venture (75%); Sugar Australia Pty Ltd (75%); Tatefield Pty Ltd (75%); Thiess Bros Pty Ltd; Thiess Holdings Pty Ltd.

PRINCIPAL COMPETITORS

Hanson PLC; Boral Limited; James Hardie Industries N.V.; Holcim Ltd.; Cargill, Incorporated; Brickworks Limited; Adelaide Brighton Ltd.

FURTHER READING

Bartholomeusz, Stephen, "CSR Chief Reconstructed a Habitual Destroyer of Value," The Age (Melbourne), November 20, 2002, p. 3.

Brooks, Geraldine, "Australia's CSR Boosts Its Sagging Fortunes," Wall Street Journal, May 14, 1987.

Chow, Lotte, "Go North: Like Many Australian Firms, CSR Sees Its Future in Asia," Far Eastern Economic Review, August 29, 1996, p. 60.

CSR Limited130 Years, Sydney: CSR Limited, 1986.

Hale, Brian, "CSR Builds on an American Vision," Business Review Weekly, July 7, 2000, p. 28.

Hall, James, "Maycock to Take the Reins at CSR," Australian Financial Review, November 3, 2006, p. 57.

Hughes, Anthony, "CSR Makes $950m US Foray," Sydney Morning Herald, July 11, 2002, p. 21.

Lowndes A. G., ed., South Pacific Enterprise: The Colonial Sugar Refining Company Limited, Sydney: Angus and Robertson, 1956, 500 p.

Marsh, Virginia, "Cement Groups in Australia Set to Combine," Financial Times, November 27, 2002, p. 30.

, "CSR Continues with US Spree," Financial Times, July 11, 2002, p. 34.

Rochfort, Scott, "CSR Draws Interest As Boss Refines an Ugly Duckling," Sydney Morning Herald, July 7, 2003, p. 27.

Sherwell, Chris, "CSR Sheds Its Unloved Reputation," Financial Times, December 2, 1988.

, "CSR Works to a Sweeter Future," Financial Times, June 11, 1987.

, "Shifts in Australian Mining Row," Financial Times, August 24, 1988.

Stensholt, John, "CSR's Sweet Call," Business Review Weekly, December 1, 2005, p. 38.

Tait, Nikki, "CSR Settles 18,000 Asbestos Claims," Financial Times, April 30, 1996, p. 27.

, "Housing Weakness Drags Down CSR," Financial Times, May 13, 1997, p. 30.

, "Kuok and CSR in Construction Materials Deal," Financial Times, September 29, 1995, p. 27.

Vitorovich, Lilly, "CSR Posts Profit Gain, Plans to Spin Off Units," Asian Wall Street Journal, November 20, 2002, p. M4.

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CSR Limited

CSR Limited

Level 24, 1 OConnell Street
Sydney
New South Wales 2001
Australia
(02) 9235-8000
Fax: (02) 9235-8044
Web site: http://www.csr.com.au

Public Company
Incorporated
: 1887 as The Colonial Sugar Refining
Company
Employees : 19,700
Sales : A$6.96 billion (US$4.20 billion) (1998)
Stock Exchanges : Australian London New Zealand
NAIC : 212299 Other Metal Ore Mining; 212321 Construction Sand & Gravel Mining; 311311 Sugar Cane Mills; 311312 Cane Sugar Refining; 321113 Sawmills; 324122 Asphalt Shingle & Coating Materials Manufacturing; 326122 Plastics Pipe & Pipe Fitting Manufacturing; 327331 Concrete Block & Brick Manufacturing; 32739 Other Concrete Product Manufacturing; 32732 Ready-Mix Concrete Manufacturing; 32742 Gypsum Product Manufacturing; 331312 Primary Aluminum Production

CSR Limited is one of the worlds largest building and construction materials companies, with operations in Australia, New Zealand, Asia, and the United States. The company is also Australias largest manufacturer of raw and refined sugar products. Although CSR was established in 1855 to refine sugar and soon after diversified into raw sugar milling, its sugar activities represent only about one-fifth of CSRs annual sales. In an effort to change its image from that of solely a sugar producer, CSR has been promoting its increasingly strong position in the building and construction materials industry. The company has substantial operations in quarrying, concrete, cement products, bricks and tiles, plasterboard, insulation, and timber products, as well as investments in aluminum.

Early History

The Colonial Sugar Refining Company (CSR) was formed as a partnership in January 1855 under the chairmanship of Edward Knox, an ambitious 35-year-old entrepreneur. Having acquired some of the assets of the defunct Australasian Sugar Company, the partnership bought the Brisbane House sugar refinery in Sydney. Two years later, in 1857, a new holding companythe Victoria Sugar Companywas formed jointly by CSR shareholders and Victorian business interests, and a sugar refinery and molasses distillery were set up at Port Melbourne. Later that year, Knox sold his house and some of his shares in the company and left for Europe by ship. Before he reached Europe, he was bombarded with letters telling him the company was ruined. Knox returned to Australia immediately.

The company underwent serious financial difficulties following the depression in the world sugar trade from 1857 to 1858. CSR countered the potentially disastrous effects of the depression by diversifying into sugar milling. By 1869 the company had built a number of new mills in northern New South Wales. With the construction of the Chatsworth, South-gate, and Darkwater mills CSR entered the sugar milling industry. Darkwater Mill has since been renamed Harwood Mill and is the oldest continually working sugar mill in Australia. Knoxs second son, Edward William, was put in charge of the project.

The 1870s saw further diversification within the sugar industry. CSR had by now established a network of mills and refineries on the Queensland coast and the purchase of a small freight shipSS Keera in 1873 gave the company an entry into the coastal shipping business. In 1874 the Victoria Sugar companys refinery in Melbourne was destroyed by fire and then replaced by the newly built Joshua Brothers refinery.

CSR continued its program of expansion throughout the next decade. On his retirement, Knox handed over management of the company to his son, writing to a friend, I can only expect to leave a kind of smeary, sugary track behind me. Edward William Knox was an impetuous and autocratic manager, anxious to emulate his fathers success. The milling operations were extended to Queensland, where new mills had been constructed in the early 1880s. In 1882 CSR embarked on its first overseas project, building a mill in Nausori, Fiji. The following year CSR formed the New Zealand Sugar Company to refine sugar in New Zealand, as an equal partnership with the Victoria Sugar Company and business interests in New Zealand. In the mid-1880s CSRs research team conducted the first sugar cane fertilizer trials.

Incorporated in 1887

On July 1, 1887, CSR was amalgamated with the Victoria Sugar Company and was incorporated as a public company, The Colonial Sugar Refining Company Limited. The new company merged the following year with the New Zealand Sugar Company, and CSR was established as a leader in the Australian sugar industry. As the 19th century drew to a close, CSR continued to acquire mills along the Queensland coast and set up a new refinery in Brisbane. Administrative changes, designed to make management of the spreading company more efficient, were introduced in the early 1890s: sugar cane estates in Queensland were divided into small farms for leasingwith the rights of purchaseto cane growers. In 1899 the companys investment in research and development allowed it for the first time to buy cane on the basis of its analyzed sugar content. Other sugar companies were less advanced in the research and application of chemical analysis, and CSRs commitment to research undoubtedly assisted its domination of the domestic sugar industry. In 1904 the company bred Australias first successful commercial variety of sugar cane, which it christened Clarks Seedling.

Further expansion took place in the early part of the 20th century. An expedition in 1908 to New Guinea to collect samples of sugar cane and thereby improve breeding of new cane varieties for commercial use, gave rise to better cane and sugar yields. Two years earlier several Fijian plantations had been sold to a group of company officers who wanted to work for themselves. As World War I approached, CSR continued to consolidate its refining and milling businesses and sent another cane-gathering party to New Guinea. Trade in Australia benefited from the increase in the British governments demand for sugar and resources after World War I. In 1923 the commonwealth government transferred control of the sugar industry to the Queensland government, and CSR made its first annual refining and marketing agreement with the government. The worldwide Great Depression of the 1930s was threatening, however, and a downturn in demand was anticipated. In 1933 Edward William Knox retired, four months before his death. His son, Edward Ritchie Knox, took over as general manager.

Diversified into Building Materials and Construction Starting in the Late 1930s

The onset of World War II precipitated CSRs second major diversification. A pilot plant set up in 1936 to assess the feasibility of making wallboard from the residue fiber of crushed sugar cane provided CSR with what transpired to be a commercial method of disposing of its sugar millery byproducts. In 1939 CSR acquired shares in a chemicals plant in Sydney and opened a wallboard factory nearby, where the new product Cane-ite was produced. To meet the needs of the Australian war effort, CSR reduced its sugar-based production activities from 1939 onward to manufacture war-related materials. A new plaster mill was introduced in Sydney in 1942. Two years later CSR began mining asbestos when it acquired Australian Blue Asbestoss mine in Wittenoom, Western Australia.

Although CSR was known mainly as a sugar producer, the postwar program of diversification changed the corporate profile considerably. The last year of the war marked CSRs first substantial entry into building materials and construction when the company bought an interest in Fletcher Holdings, a large construction and timber company based in New Zealand. During the late 1940s CSR introduced new building products plasterboard and floor tilesand expanded its factory stock in Sydney. The wave of expansion culminated in the formation of a new wholly owned subsidiary, CSR Chemicals, in 1948.

Over the next ten years, under the directorship of Edward Ritchie Knox, CSR continued to expand. The companys sugar operations were extended and facilities for bulk-loading raw sugar were introduced at two of the original Queensland mills and later extended to cover all 12 mills. In 1955 CSR was appointed coordinator for the Australian sugar industrys conversion to bulk handling. From the mid-1950s on, the company increased its involvement in the building materials industry. The acquisition in 1959 of the Bradford Insulation Group gave CSR a major share of the insulation products market throughout Australia. In the same year, the CSR Chemicals subsidiary spawned two new subsidiaries and a new productparticleboardwas introduced. Developments at this time included the takeover of Masonite Holdings, which manufactured hardboard.

The company opened new research centers in Brisbane in 1962 and in Sydney in 1963. The following year it joined American Metal Climax in a project to develop the Mount Newman iron ore deposits in Western Australia. From the mid-1960s until the early 1980s CSR increased its involvement in resources, including bauxite and alumina, tin, copper, coal, oil and gas, gold, aluminum, and minerals exploration. At the same time that CSR was increasing its investment in resources, it entered the concrete market for the first time. In 1965 it acquired a 50 percent sharewith Blue Metal Industriesin Ready Mixed Concrete (RMC).

The 1969 takeover of Wunderlich Ltd., a large manufacturer of roof tiles, asbestos cement products, and architectural metal products, gave CSR its first significant entry into the Australian roof tile industry. The business was subsequently sold in 1983 to Monier. In 1972 the Fijian government bought CSRs Fijian sugar mills, ending the companys 90-year involvement in the Fijian sugar industry.

The resource ventures begun in the 1960s, during Australias mineral boom, continued throughout the 1970s. The company began to invest in alumina and bauxite; various gold, tin, and copper ventures; and later, coal, oil, and gas. Extensive investments in a number of established coal mines made in the 1970s proved unsuccessful. The prices of coal and oil dropped almost immediately after the acquisitions had been made, near the peak of the energy cycle. A large proportion of loans made for the acquisition of coal and oil assets were in U.S. dollars. The repayments of these loans increased significantly with the fall in the Australian dollar exchange rate in 1983-84, coupled with falling energy prices.

Renamed CSR Limited in 1983

To reflect its diversification, and in an effort to modernize its corporate identity, the company dropped Colonial Sugar Refining Company from its original name and in 1973 it became CSR Limited. In the following year CSR entered the cement industry through the joint acquisition, with Pioneer International, of Australian and Kandos Cement. The managerial difficulties CSR was experiencing with such diverse business interests forced a strategic reorganization. The sugar division was formed in 1974 and the mineral division and the building and construction materials division were formed the following year.

Further diversification took place in 1977, when CSR bought AAR Ltd., an exploration company with natural gas, oil, and drilling contracts. Thiess, a large coal company, was acquired in 1979. When the resources boom of the 1970s and early 1980s petered out, CSR was left with a debt and interest burden that made the company vulnerable to takeover bids. Investors had lost faith in the company and CSR share prices plummeted. The company was surviving in large part on the activities of the sugar and building materials divisions, but the drop in world sugar prices in the early to mid-1980s made the situation worse. Until the extensive management and corporate restructuring that began in 1985, CSR was a struggling company. Bryan Kelman became general manager in 1983.

In 1981 the company significantly increased its investment in the oil industry when it bought an Australian-based, U.S.-owned oil and petroleum producer, Delhi International Oil Corporation. The major investments in coal, and particularly oil, were badly timed. The Delhi acquisition was hit with falling oil prices, lack of new oil discoveries, and a falling Australian dollar, while carrying extensive debt in U.S. dollars. As a result, the company began a process of repaying much of its debt through the sale of iron ore and some coal assets. This was followed in 1987 with the sale of Delhi for US$985 million, resulting in a loss of more than US$600 million.

In 1985 sugar profits fell dramatically. Growing public concern about the health risks associated with sugar consumption and a slump in world prices hit CSR badly. In 1985 sugar was at its lowest price in 200 years. Many cane farmers were living below the poverty line and accused CSR of mismanaging the industry in which it played a dominant role.

Shifted Away from Resources, Toward Manufacturing in the Late 1980s

In 1987 CSR began the process of changing the company from a diversified resources and industrial group to a diversified manufacturing company in building and construction materials and sugarcore activities in which the company had long years of experience, since 1855 in sugar and since 1939 in building materials. Between 1987 and 1989 the company sold more than US$2 billion of low-yielding and lossmaking assets in resources and reinvested these funds in building and construction materials and sugar operations, including large investments in the United States. By the end of the 1980s CSR had sold all of its interests in tin, gold, and mineral exploration, its coal mines, and its oil and gas interests. The head office in Sydney, where the company had been based for 106 years, also was sold to compensate for falling profits. In addition, a more streamlined management structure was introduced. Ian Burgess took over as chief executive of CSR in 1987, and his ruthless approach to restructuring the flagging conglomerate was generally accepted as having saved CSR from takeover or collapse. Burgess had joined the company straight from school in 1950 and was anxious to change the antiquated management style. It was a very conservative place, he told the Wall Street Journal on May 14, 1987, you even had to get your wife approved. You had to go to your boss and say Please sir, can I get married? Under Burgesss guidance, each of CSRs divisions was transformed. The building materials division, for example, had employed 157 senior managers. After Burgesss reorganization, there were three. Burgess also dispensed with the CSR annual cricket match, a 94-year-old company tradition. By the end of 1989 the reorganization was complete.

The acquisition of the U.S. Rinker Materials Corporation in 1988 gave CSR a large proportion of the Florida concrete and quarry products market. In 1990 CSR acquired ARC America, a large quarry and concrete products operator with interests in 20 states including Ohio, Indiana, Michigan, Washington, California, Nevada, Texas, and Florida. By the end of 1990 the building and construction division made up 64 percent of total sales. CSR had grown into one of the largest quarrying and concrete operators in the United States and had more quarries there than in Australia. The same year CSR announced record profits. Against a background of high inflation rates and a weak Australian dollar in the mid-1980s, CSRs divestment policy appeared to have paid off. Further expansion in timber, when CSR bought Softwood Holdings in 1988, meant a quadrupling of profits for the timber products division. Despite slow growth in the construction industry, but with profits increasing by 65 percent in 1989, CSR began to focus on Europe and the United States for expansion. In 1987 the company bought a 49 percent share in Redland Plasterboard, a large British construction company with assets throughout Europe. Increasing competition in the United Kingdom and European plasterboard industry caused CSR to sell out its interest in 1990.

In 1989 controversy concerning the companys alleged negligence in its management of the Wittenoom asbestos mine, which it had sold in 1966, was settled. CSR paid out an estimated A$30 million in damages to more than 300 workers suffering from asbestos-related lung diseases. Australian newspapers referred to the event as Australias Bhopal.

A commercial development affecting CSR in the early 1990s was the deregulation of the domestic refined sugar industry, which began in 1989. CSR reassessed its refining capacity and locations in the face of greater competition, both from domestic sources and imports. Although profits as a commercial refiner were better than those earned as a toll refiner on behalf of the Queensland government, CSR lost about 20 percent of its market share within Australiait stood at about 75 percent by mid-decade.

CSR continued its U.S. expansion in the 1990s, including the purchase of three U.S. building materials companies in 1996. By that time U.S. activities represented about one-third of CSRs total assets and 26 percent of its worldwide workforce. During the 1998 fiscal year more than 30 percent of CSRs revenues were derived from its North American operations and nearly 32 percent of its operating profit came from that continent.

With its North American operations continuing to grow, CSR also sought growth on another continent, that of Asia. With booming Asian markets located in CSRs own backyard, the companys growth there in the early and mid-1990s made much sense. Having already established a joint venture in Taiwan to build and operate a concrete products factory, CSR in 1994 formed a joint venture to supply premixed concrete in northern China, the companys first foray into that nation. Other joint ventures were formed in Hong Kong, Malaysia, Thailand, and Indonesia, with CSR entering the Asian market in four product areas: plasterboard, insulation materials, construction materials, and timber. In 1995 CSR combined its interests in these joint ventures within a new company called CSR Kuok Asia Ltd., which was 75 percent owned by CSR and 25 percent owned by the Kuok Group, an entity headed by Malaysian-Chinese businessman Robert Kuok. During fiscal 1998, however, CSR bought out the Kuok groups interest and took full control of CSR Kuok Asia. From 1994 to 1997 CSR increased the number of plants it operated in Asia from 2 to 19. For the 1997 fiscal year, CSRs revenues from Asia increased more than 50 percent over the preceding year, reaching A$147 million. The Asian economic crisis that erupted during 1997 reversed this trend, however, as revenues from Asia for the 1998 fiscal year fell to A$ 132.8 million. That year CSR made no further investments in the region.

Late 1990s Restructuring

From the mid-1990s into the late 1990s, CSR was seeing a steady increase in revenues but a declining trend in operating profits. The company concluded that it was being dragged down by a number of underperforming units and that it would be to the companys advantage to reduce its interests to a narrower core through restructuring. During fiscal 1997 CSR closed 38 less efficient plants and generated A$240 million from the sale of noncore assets. The following year CSR sold American Aggregates Corporation, a U.S.-based operator of quarries and crushed stone plants, to Martin Marietta Materials Inc. for about US$235 million. Also during fiscal 1998 CSR took a A$398 million (US$240 million) after-tax charge to write down the value of a number of underperforming units. This charge led to a net loss for the year of A$ 109.8 million (US$66.3 million). CSRs restructuring efforts continued into 1999. The company announced in February 1999 that it had reached an agreement to sell its contract mining and civil contracting businesses to Downer Group Limited for about A$135 million (US$84.9 million). In April 1999 CSR announced that it would sell its South Australian and Victorian softwood plantations and sawmills to a U.S.-based timber partnership, RII Weyerhaeuser World Timberfund Pty. Ltd., for A$224 million (US$142.4 million). Through these divestments, CSR appeared to be securing itself a much more promising future as a highly focused building and construction material firm.

Principal Operating Units

CSR Construction Materials; CSR Building Materials; CSR America; CSR Timber Products; CSR Sugar; Aluminum.

Further Reading

Brooks, Geraldine, Australias CSR Boosts Its Sagging Fortunes, Wall Street Journal, May 14, 1987.

Chow, Lotte, Go North: Like Many Australian Firms, CSR Sees Its Future in Asia, Far Eastern Economic Review, August 29, 1996, p. 60.

CSR: Building in Quality; Fact Book, Sydney: CSR, January 1990.

CSR Limited130 Years, Sydney: CSR, 1986.

Lowndes A. G., ed., South Pacific Enterprise, Sydney: Angus & Robertson, 1956.

Sherwell, Chris, CSR Sheds Its Unloved Reputation, Financial Times, December 2, 1988.

_____, CSR Works to a Sweeter Future, Financial Times, June 11, 1987.

_____, hifts in Australian Mining Row, Financial Times, August 24, 1988.

Tait, Nikki, CSR Settles 18,000 Asbestos Claims, Financial Times, April 30, 1996, p. 27.

_____, Housing Weakness Drags Down CSR, Financial Times, May 13, 1997, p. 30.

_____, Kuok and CSR in Construction Materials Deal, Financial Times, September 29, 1995, p. 27.

Juliette Bright

updated by David E. Salamie

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CSR Limited

CSR Limited

Level 35
Grosvener Place
225 George Street
Sydney, New South Wales
Australia
(02) 235-8333
Fax: (02) 235-8555

Public Company
Incorporated: 1887 as The Colonial Sugar Refining Company
Employees: 22,350
Sales: A$4.89 billion (US$3.86 billion)
Stock Exchanges: Sydney Auckland London Frankfurt

CSR is one of Australias largest building and construction materials companies, and operates additionally in New Zealand and the United States. The company is also Australias largest manufacturer of raw and refined sugar products. While CSR was established in 1855 to refine sugar and soon after diversified into raw sugar milling, its sugar activities represent only about one-quarter of CSRs annual sales. In an effort to change its image from that of solely a sugar producer, CSR has been promoting its increasingly strong position in the building and construction materials industry. The company has substantial operations in quarrying, concrete, cement products, bricks and tiles, plasterboard, insulation, and timber products, as well as investments in aluminum.

The Colonial Sugar Refining Company (CSR) was formed as a partnership in January 1855 under the chairmanship of Edward Knox, an ambitious 35-year-old entrepreneur. Having acquired some of the assets of the defunct Australasian Sugar Company, the partnership bought the Brisbane House sugar refinery in Sydney. Two years later, in 1857, a new holding companythe Victoria Sugar Companywas formed jointly by CSR share-holders and Victorian business interests, and a sugar refinery and molasses distillery were set up at Port Melbourne. Later that year, Knox sold his house and some of his shares in the company and left for Europe by ship. Before he reached Europe, he was bombarded with letters telling him the company was ruined. Knox returned to Australia immediately.

The company underwent serious financial difficulties following the depression in the world sugar trade from 1857 to 1858. CSR countered the potentially disastrous effects of the depression by diversifying into sugar milling. By 1869 the company had built a number of new mills in northern New South Wales. With the construction of the Chatsworth, Southgate, and Darkwater mills CSR entered the sugar-milling industry. Darkwater Mill has since been renamed Harwood Mill and is the oldest continually working sugar mill in Australia. Knoxs second son, Edward William, was put in charge of the project.

The 1870s saw further diversification within the sugar industry. CSR had by now established a network of mills and refineries on the Queensland coast and the purchase of a small freight shipSS Keera in 1873 gave the company an entry into the costal shipping business. In 1874, the Victoria Sugar Companys refinery in Melbourne was destroyed by fire and was replaced by the newly built Joshua Brothers refinery.

CSR continued its program of expansion throughout the next decade. On his retirement, Knox handed over management of the company to his son, writing to a friend, I can only expect to leave a kind of smeary, sugary track behind me. Edward William Knox was an impetuous and autocratic manager, and anxious to emulate his fathers success. The milling operations were extended to Queensland, where new mills had been constructed in the early 1880s. In 1882 CSR embarked on its first overseas project, building a mill in Nausori, Fiji. The following year, CSR formed the New Zealand Sugar Company to refine sugar in New Zealand, as an equal partnership with the Victoria Sugar Company and business interests in New Zealand. In the mid-1880s, CSRs research team conducted the first sugar cane-fertilizer trials.

On July 1, 1887, CSR was amalgamated with the Victoria Sugar Company and was incorporated as a public company, the Colonial Sugar Refining Company Limited. The new company merged the following year with the New Zealand Sugar Company, and CSR was established as a leader in the Australian sugar industry. As the 19th century drew to a close, CSR continued to acquire mills along the Queensland coast and set up a new refinery in Brisbane. Administrative changes, designed to make management of the spreading company more efficient, were introduced in the early 1890s: sugar cane estates in Queensland were divided into small farms for leasingwith the rights of purchaseto cane growers. In 1899, the companys investment in research and development allowed it for the first time to buy cane on the basis of its analyzed sugar content. Other sugar companies were less advanced in the research and application of chemical analysis, and CSRs commitment to research undoubtedly assisted its domination of the domestic sugar industry. In 1904 the company bred Australias first successful commercial variety of sugar cane, which it christened Clarks Seedling.

Further expansion took place in the early part of the 20th century. An expedition in 1908 to New Guinea to collect samples of sugar cane, to improve breeding of new cane varieties for commercial use, gave rise to better cane and sugar yields. Two years earlier several Fijian plantations had been sold to a group of company officers who wanted to work for themselves. As World War I approached, CSR continued to consolidate its refining and milling businesses, and sent another cane-gathering party to New Guinea. Trade in Australia benefited from the increase in the British governments demand for sugar and resources after World War I. In 1923 the commonwealth government transferred control of the sugar industry to the Queensland government, and CSR made its first annual refining and marketing agreement with the government. The world Depression of the 1930s was threatening, however, and a downturn in demand was anticipated. In 1933 Edward William Knox retired, four months before his death. His son, Edward Ritchie Knox, took over as general manager.

The onset of World War II precipitated CSRs second major diversification. A pilot plant set up in 1936 to assess the feasibility of making wallboard from the residue fiber of crushed sugar cane provided CSR with what transpired to be a commercial method of disposing of its sugar millery byproducts. In 1939 CSR acquired shares in a chemicals plant in Sydney and opened a wallboard factory nearby, where the new product Cane-ite was produced. To meet the needs of the Australian war effort, CSR reduced its sugar-based production activities from 1939 onwards in order to manufacture war-related materials. A new plaster mill was introduced in Sydney in 1942. Two years later, CSR began mining asbestos when it acquired Australian Blue Asbestoss mine in Wittenoom, Western Australia.

While CSR was known mainly as a sugar producer, the postwar program of diversification changed the corporate profile considerably. The last year of the war marked CSRs first substantial entry into building materials and construction when the company bought an interest in Fletcher Holdings, a large construction and timber company based in New Zealand. During the late 1940s, CSR introduced new building productsplasterboard and floor tilesand expanded its factory stock in Sydney. The wave of expansion culminated in the formation of a new wholly owned subsidiary, CSR Chemicals, in 1948.

Over the next ten years, under the directorship of Edward Ritchie Knox, CSR continued to expand. The companys sugar operations were extended and facilities for bulk-loading raw sugar were introduced at two of the original Queensland mills, and later extended to cover all twelve mills. In 1955, CSR was appointed coordinator for the Australian sugar industrys conversion to bulk handling. From the mid-1950s on, the company increased its involvement in the building-materials industry. The acquisition in 1959 of the Bradford Insulation Group gave CSR a major share of the insulation-products market throughout Australia. In the same year the CSR Chemicals subsidiary spawned two new subsidiaries, and a new productparticleboardwas introduced. Developments at this time included the takeover of Masonite Holdings, which manufactured hardboard.

The company opened new research centers in Brisbane in 1962, and in Sydney in 1963. The following year it joined American Metal Climax in a project to develop the Mount Newman iron-ore deposits in Western Australia. From the mid-1960s until the early 1980s CSR increased its involvement in resources, including bauxite and alumina, tin, copper, coal, oil and gas, gold, aluminum, and minerals exploration. At the same time as CSR was increasing its investment in resources, it also entered the concrete market for the first time. In 1965 it acquired a 50% sharewith Blue Metal Industriesin Ready Mixed Concrete (RMC).

The 1969 takeover of Wunderlich Ltd., a large manufacturer of roof tiles, asbestos cement products, and architectural metal products, gave CSR its first significant entry into the Australian roof-tile industry. The business was subsequently sold in 1983 to Monier. In 1972 the Fijian government bought CSRs Fijian sugar-mills, ending the companys 90-year involvement in the Fijian sugar industry.

The resource ventures begun in the 1960s, during Australias mineral boom, continued throughout the 1970s. The company began to invest in alumina and bauxite; various gold, tin, and copper ventures; and later, coal, oil, and gas. Extensive investments in a number of established coal mines made in the 1970s proved unsuccessful. The prices of coal and oil dropped almost immediately after the acquisitions had been made, near the peak of the energy cycle. A large proportion of loans made for the acquisition of coal and oil assets were in US dollars. The repayments of these loans increased significantly with the fall in the Australian dollar exchange rate in 1983-1984, coupled with falling energy prices.

To reflect recent diversification, and in an effort to modernize corporate identity, the company dropped Colonial Sugar Refining Company from its original name and in 1973 it became CSR Limited. In the following year, CSR entered the cement industry through the joint acquisition, with Pioneer International, of Australian and Kandos Cement. The managerial difficulties CSR was experiencing with such diverse business interests forced a strategic reorganization. The sugar division was formed in 1974 and the mineral division and the building- and construction-materials division were formed the following year.

Further diversification took place in 1977, when CSR bought AAR Ltd., an exploration company with natural gas, oil, and drilling contracts. Thiess, a large coal company, was acquired in 1979. When the resources boom of the 1970s and early 1980s petered out, CSR was left with a debt and interest burden that made the company vulnerable to takeover bids. Investors had lost faith in the company and CSR share prices plummeted. The company was surviving largely on the activities of the sugar and building materials divisions, but the drop in world sugar prices in the early- to mid-1980s made the situation worse. Until the extensive management and corporate restructuring which began in 1985, CSR was a struggling company. Bryan Kelman became general manager in 1983.

In 1981 the company significantly increased its investment in the oil industry when it bought an Australian-based, U.S.-owned oil and petroleum producer, Delhi International Oil Corporation. The major investments in coal, and particularly oil, were badly timed. The Delhi acquisition was hit with falling oil prices, lack of new oil discoveries, and a falling Australian dollar, while carrying extensive debt in U.S. dollars. As a result, the company began a process of repaying much of its debt through the sale of iron ore and some coal assets. This was followed in 1987 with the sale of Delhi for US$985 million, resulting in a loss of over US$600 million.

In 1985, sugar profits fell dramatically. Growing public concern about the health risks associated with sugar consumption and a slump in world prices hit CSR badly. In 1985 sugar was at its lowest price in 200 years. Many cane farmers were living below the poverty line and accused CSR of mismanaging the industry in which it played a dominant role.

In 1987 CSR began the process of changing the company from a diversified resources and industrial group to a diversified manufacturing company in building and construction materials and sugarcore activities in which the company had long years of experience, since 1855 in sugar and since 1939 in building materials. Between 1987 and 1989 the company sold over US$2 billion of low-yielding and lossmaking assets in resources and reinvested these funds in building and construction materials and sugar operations, including large investments in the United States. By the end of the 1980s, CSR had sold all its interests in tin, gold, and mineral exploration, its coal mines, and its oil and gas interests. The head office in Sydney, where the company had been based for 106 years, was also sold to compensate for falling profits. A more steamlined management structure was also introduced. Ian Burgess took over as chief executive of CSR in 1987, and his ruthless approach to restructuring the flagging conglomerate is generally accepted as having saved CSR from takeover or collapse. Burgess had joined the company straight from school in 1950, and was anxious to change the antiquated management style. It was a very conservative place, he told The Wall Street Journal on May 14, 1987, you even had to get your wife approved. You had to go to your boss and say Please sir, can I get married? Under Burgesss guidance, each of CSRs divisions was transformed. The building materials division, for example, had employed 157 senior managers. After Burgesss reorganization, there were three. Burgess also dispensed with the CSR annual cricket match, a 94-year-old company tradition. By the end of 1989 the reorganization was complete.

The acquisition of the U.S. Rinker Materials Corporation in 1988 gave CSR a large proportion of the Florida concrete and quarry products market. In 1990 CSR acquired ARC America, a large quarry and concrete products operator with interests in 20 states including Ohio, Indiana, Michigan, Washington, California, Nevada, Texas, and Florida. By the end of 1990 the building and construction division made up 64% of total sales. CSR is one of the largest quarrying and concrete operators in the United States, and has more quarries there than in Australia. The same year, CSR announced record profits. Against a background of high inflation rates and a weak Australian dollar in the mid 1980s, CSRs divestment policy appeared to have paid off. Further expansion in timber, when CSR bought Softwood Holdings in 1988, meant a quadrupling of profits for the timber-products division. Despite slow growth in the construction industry, but with profits increasing by 65% in 1989, CSR began to focus on Europe and the United States for expansion. In 1987, the company bought a 49% share in Redland Plasterboard, a large British construction company with assets throughout Europe. Increasing competition in the U.K. and European plasterboard industry caused CSR to sell out its interest in 1990.

In 1989 controversy concerning the companys alleged negligence in its management of the Wittenoom asbestos mine, which it had sold in 1966, was settled. CSR paid out an estimated A$30 million in damages to over 300 workers suffering from asbestos-related lung diseases. Australian newspapers referred to the event as Australias Bhopal.

A commercial development affecting CSR in the 1990s was the deregulation of the domestic refined sugar industry, which began in 1989. CSR is currently reassessing its refining capacity and locations in the face of greater competition, both from domestic sources and eventually from imports. While profits as a commercial refiner are better than those earned as a toll refiner on behalf of the Queensland government, CSR has lost about 20% of its market share within Australiait now stands at about 75%.

The company has removed itself from the more volatile resources markets, but still has to cope with the cyclical nature of the building and construction industry and the instability of the sugar market.

Because CSR operates in a mature market within the basic end of the Australian building and construction materials sector, major opportunities for growth within Australia are limited. As a result, CSR has focused on the United States as an area for future growth, particularly in quarry and concrete products. CSR already has about 30% of its assets based in the United States. This growth is likely to continue.

Principal Subsidiaries

CSR Finance Ltd.; CSR Investments Pty Ltd.; Farrer Properties Ltd.; Monier PGH Ltd. (51%); Bradford Enercon Inc. (Canada, 70%); Synkoloid Holdings Inc. (Canada); Beadex Holding Inc. (U.S.A.); CSR Hebel Australia Pty Ltd. (82.5%); CSR America Inc. (U.S.A.); Rinker Materials Corp. (U.S.A.); American Aggregates Corp. (U.S.A.); Associated Sand and Gravel Co. Inc. (U.S.A.); ARC Materials Corp. (U.S.A.); Hydro Conduit Corp. (U.S.A.); Southern Aggregates Co. (U.S.A.); Softwood Holdings Ltd.; Hardboards Australia Ltd.; New Zealand Sugar Co. Ltd.; Pioneer Sugar Mills Ltd.; The Haughton Sugar Co. Pty Ltd.; Gove Aluminium Ltd. (70%); Gove Aluminium Finance Ltd. (70%).

Further Reading

Lowndes A.G., ed., South Pacific Enterprise, Sydney, Angus & Robertson, 1956; CSR Limited130 years, Sydney, CSR, 1986; Brooks, Geraldine, Australias CSR Boosts Its Sagging Fortunes, The Wall Street Journal, May 14, 1987; Sherwell, Chris, CSR Works To A Sweeter Future, The Financial Times, June 11, 1987; Sherwell, Chris, Shifts in Australian Mining Row, The Financial Times, August 24, 1988; Sherwell, Chris, CSR Sheds Its Unloved Reputation, The Financial Times, December 2, 1988; CSR: Building In Quality; Fact Book, Sydney, CSR, January 1990.

Juliette Bright

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"CSR Limited." International Directory of Company Histories. 1991. Encyclopedia.com. 24 Aug. 2016 <http://www.encyclopedia.com>.

"CSR Limited." International Directory of Company Histories. 1991. Encyclopedia.com. (August 24, 2016). http://www.encyclopedia.com/doc/1G2-2840700232.html

"CSR Limited." International Directory of Company Histories. 1991. Retrieved August 24, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-2840700232.html

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