An improved result in Western Australia, despite challenging market conditions and continued falls in brick selling prices, has helped building materials company Brickworks boost underlying net profit to $223.7 million for the 2018 financial year.
An improved result in Western Australia, despite challenging market conditions and continued falls in brick selling prices, has helped building materials company Brickworks boost underlying net profit to $223.7 million for the 2018 financial year.
The company was helped by completion of a number of restructuring initiatives within its WA business, including the closure of six factories over the past 18 months.
Brickworks also completed upgrade works to its Cardup plant in WA during the year to June.
Managing director Lindsay Partridge said the group’s building products division, which recorded a 16.8 per cent rise in earnings before interest and taxes to $76 million, had benefited from Austral Bricks.
“The uplift in earnings was primarily due to another strong performance from Austral Bricks, including an improvement in WA following a range of restructuring activities," he said.
“During the year, upgrade works were completed at the Rochedale plant in Queensland and the Cardup plant in WA.
“Bristile Roofing, Austral Precast and Auswest Timbers all delivered improved performance in 2018, whilst Austral Masonry was approximately in line with the prior year.”
Market conditions in WA remained tough during FY 18, with housing commencements down 4.9 per cent compared to last year.
“Weakness in Western Australia persisted during the period, with both detached houses and other residential activity continuing to decline, albeit at a slower rate,” Mr Partridge said.
“Building activity in this state is now down by over 40 per cent in the past three years, and detached house commencements are at their lowest level for over 15 years.
Bristile Roofing posted a 6.7 per cent increase in revenue to $136.4 million, however, Mr Partridge said the difficult conditions in WA resulted in decreased sales and earnings.
Auswest Timbers earnings were higher in FY17 despite a 4.2 per cent drop in revenue to $44.6 million.
Mr Partridge said Auswest earnings in WA improved due to restructuring activities at Greenbushes.
“In WA, improved earnings were delivered following the commencement of restructuring activities in the prior year,” he said.
“During the year, the restructuring process continued, with the installation of a large log line at Greenbushes, currently being commissioned.
“This restructuring program allows the consolidation of operations to one site at Greenbushes, positioning this business for continued improvement in the years ahead.”
Brickworks managed to improve underlying net profit after tax 13.9 per cent, while statutory NPAT fell 5.8 per cent to $175.4 million.
The company also lifted its full-year dividend 6 per cent to 54 cents per share.
Mr Partridge said in his outlook that the company was forecasting improved margins in WA.
“On the other side of the country in WA, the wet winter period has adversely impacted demand, in an already difficult market,” he said.
“Brick selling prices continue to fall in this state, however we expect margins to be supported by continued manufacturing cost savings, following restructuring initiatives and capital upgrade projects that have been completed.”
Shares in Brickworks were down 4.92 per cent at $16.26 each at 1.20pm AEDT.
