BGC posts $63m loss

BGC Australia has posted a $63.22 million loss for the year to June 2023, citing continued uncertainty linked to inflation and interest rate rises, and the impact of ongoing commercial disputes. 

This follows a $41.6 million loss for FY22 and a $3.3 million loss for FY21, and comes as the company focuses more on its manufacturing divisions while reducing its construction output.

The company faces a raft of commercial and legal challenges, including a Federal Court battle with competitors Brickworks and Austral over alleged predatory pricing.

BGC also stands to lose up to $700 million to replace faulty pipes installed in more than 10,000 of its homes, and faces legal challenges from some of its residential and commercial customers.

The group reported $53 million gross profit in the recent financial year, down from $95.92 million in FY22. 

BGC lost $82.55 million from its continued operations for the year, while it gained $19.32 million from the assets it sold off. 

Despite the building and manufacturing giant recording its seventh consecutive net loss, BGC remains optimistic about strong demand for its construction materials.

In FY23, BGC generated $914 million revenue, an increase on its restated 2022 figure of $881 million.

In its 2022 results, BGC recorded its revenue as $1.01 billion.

The restated revenue encompasses the company’s continuing operations, which excludes the assets recorded as discontinued or held for sale.

These include its fibre cement and plasterboard business, which it agreed to sell in October last year, its precast business assets, and what it describes as non-core property.

In August last year, the group signed a contract with a company associated with a company director to sell its precast business assets, and the Naval Base leasehold property it occupies, for $23.55 million.

The sale, completed in November, resulted in $21.05 million being applied to repay the company's senior term debt. 

It also reported a $18.02 million sale of a non-core property in July last year.

The building giant is yet to reveal the expected sale price of its fibre and plasterboard business, but has listed the value of its assets held for sale at $135.48 million.

Of the $914 million BGC generated from contracts with customers in FY23, its building products and services arm dominated that revenue stream with $490 million earned.

Revenue from its residential and commercial contracts was $290 million and $134 million respectively.

These figures are similar to 2022, when BGC gained $881 million from customer contracts.

BGC lost $2.6 million on impairments on its non-current assets, compared with a $1.69 million loss the previous year.

Once the state’s largest residential builder, BGC ceased new home sales early last year.

It also paused signing new commercial contracts, citing volatility in the construction market.

The Len Buckeridge-founded group is facing a raft of commercial disputes brought about during 2023, which is says it intends to “vigorously progress to a favorable outcome”.

In its results, the company revealed its subsidiary Midland Brick is fighting allegations from competitors Brickworks and Austral WA that it engaged in predatory pricing.

In December last year, the Federal Court made orders requiring BGC to defend these allegations this month and Brickworks and Austral to serve a defence by February 9.

BGC said the claims brought by Austral and Brickworks had “little prospect of success” and it would “vigorously defend its position”.

The company is also embroiled in controversy over faulty pipes installed in more than 10,000 of its homes, which it says could cost up to $700 million to fix.

BGC said it would commence a recall program for the pipes, manufactured by Fletcher Building company Iplex, in March this year.

In addition, the company is locked in a dispute with Iris Residential over the Shenton Quarter apartment project, which it walked away from 95 per cent through the development. 

BGC also faces a class action from customers who faced delays to their home builds, with the lawsuit expected to commence this year.