Building decline causes $172m bite for Brickworks

A construction slowdown in Australia and North America has forced a $172 million pre-tax write-down at brick manufacturer Brickworks.

The brick manufacturer said its Austral Masonry operations in Australia will see a pre-tax $78.1 million non-cash impairment while its Brickworks North America subsidiary will record a $94.3 million impairment. The company said it will come to $123.5m after taxes.

It blamed a faster than expected slowdown in multi-residential building activity in the second half of the year, with the June commencements falling to the lowest in a decade.

“The decline has been particularly severe in the high-rise segment (more than four storeys) in Sydney and Brisbane, which are key markets,” Brickworks said in a company statement.

It added that scaled back production at its new plant in Oakdale, Sydney due to this slowdown meant it was unable to see the full benefits of this investment.

It was a similar story in the U.S., where reduced building activity for non-residential buildings as well as competition in single-family housing has weakened demand for Brickworks products.

A recent ‘plant rationalisation’ and upgrade program also forced scaled back production at its U.S. plants.