Australia on cusp of significant building boom – Brickworks

Diversified building products manufacturer Brickworks believes Australia is on the cusp of a significant building boom, notwithstanding some softness in its markets in the short term.

The company, which is also involved in property development, investment activities and brick manufacture in the United States, told its annual general meeting that it was navigating a number of economic challenges including a shift towards restrictive monetary policy from central banks and a sharp increase in interest rates.

This plus factors such as inflation, labour shortages and raw materials and spare parts issues were affecting performance at this part of the business cycle.

The Sydney company reported underlying net profit after tax of $508 million for FY23, though including significant items and discontinued operations statutory NPAT was $395 million.

Brickworks CEO Lindsay Partridge said the company continued to see a decline in new housing approvals, however margins in Australia and North America were higher and there was still a ‘large volume of work’ under construction.

Partridge said: “Margins have improved as a result of price rises and a general easing in cost pressures.

“In Australia we are also benefitting from a more focussed portfolio, following the exit of underperforming business units in recent years.

“Meanwhile in North America we are seeing efficiency benefits from the extensive plant rationalisation activities completed in recent years.”

Partridge said despite the positive start to the new year order intake was softening, with a slowdown allowing the company to take plants offline for maintenance and to manage stock levels.

“Looking beyond the short-term weakness, Australia appears to be on the cusp of a significant building boom, with record migration levels exacerbating an already chronic housing undersupply issue.

“This has emerged as a key government priority, driving ambitious building targets and long-overdue reforms to facilitate increased housing supply.

“We expect this to drive strong demand for our building products over the next decade.”

Picture: Brickworks