Boom squeezes Brickworks margins in WA

Boom times don't always result in booming profits, just ask Brickworks Ltd - the east coast owner of the Austral, Bristile and Auswest Timbers brands - which revealed eroded margins in the first half of the financial year.

In releasing its half year results today, Brickworks also noted building conditions in the state had already peaked.

Brickworks said Austral Bricks recorded overall margin gains in all major markets except WA, where lower margin imported product and higher input costs driven by the resources boom, had eroded historically high margins experienced last year.

The company's net profit after tax in the six months to January 2007 was $36.7 million, down 20.4 per cent on the $46.1 million recorded in the corresponding period last financial year.

The company said that in WA the peak had been passed but a substantial pipeline of work would likely mask any reduction for some time.

Auswest Timbers operations are reportedly improving steadily, with the strategy of converting green timber to value added products such as flooring beginning to pay off.

Brickworks estimated that residential dwellings commencements across Australia will fall 0.6 per cent in 2006-07 to around 150,000.