30/08/2016 - 11:31

Brickworks to close Malaga plant, write-down $47m

30/08/2016 - 11:31

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Building products maker Brickworks has confirmed it will close its Malaga manufacturing facility and showroom in the face of the decline in residential building activity in Western Australia.

Brickworks is closing its Austral Bricks Malaga facility and showroom.

Building products maker Brickworks has confirmed it will close its Malaga manufacturing facility and showroom in the face of the decline in residential building activity in Western Australia.

Brickworks, which operates in WA under the Austral Bricks brand, flagged the sale of one of its existing facilities in November, but didn’t disclose which of its Armadale, Bellevue or Malaga facilities would close.

The closure of the Malaga facility forms part of the company’s restructuring program in WA to lower costs; it also includes a partial refit of its Bellevue plant to increase capacity, refit works at its recently re-opened Cardup plant and minor upgrades to its Armadale plant.

All products at the Malaga plant will be moved to the Cardup facility.

“The Western Australian housing market is currently in the midst of a cyclical decline in building activity, with detached house approvals down by more than 25 per cent over the past 12 months, and industry forecasts for further declines over the medium term,” Brickworks said in a statement.

“This decline in activity has led to industry overcapacity and strong competition for sales.”

Brickworks said following completion of an asset impairment assessment, a $47 million write-down of its Austral Bricks WA assets would be recognised in its FY16 accounts, which will be released to the market late next month.

“One-off costs of around $5 million after tax, primarily in relation to the non-cash write-down of assets at Malaga, will be incurred in relation to the restructuring initiatives within Austral Bricks WA,” it said.

Brickworks expects to report a statutory net profit of between $62 million and $66 million for FY16.

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