Building materials company Brickworks Ltd says its first quarter earnings are down around 15% because of poor weather and tough conditions in the housing market, especially in NSW.
The company's CEO Lindsay Partridge told the AGM in Sydney yesterday that while first quarter earnings were boosted with the sale of its Eastwood site to the home builder AV Jennings, earnings from continuing operations were down.
"Building products experienced stronger trading conditions in Queensland, Victoria and South Australia, continuing poor conditions in New South Wales and softening conditions in Western Australia," Mr Partridge said.
"Profit was down approximately 15%, due in the main, to poor weather in the first few months, and disruptions caused by the transition from Scoresby to the new plant at Wollert in Victoria.
"Queensland, Victoria and South Australia have all shown improved business levels. New South Wales remains severely depressed, while Western Australia is slowing down from record levels.
"Exceptional wet weather affected trading conditions in the first two months of the year in a number of markets. Building Products first quarter Earnings Before Interest and Tax is approximately 15% down on last year.
"Subsequent to the end of year, a successful tender and sales process has been completed for the Eastwood property. AV Jennings has purchased the site for $70 million. Settlement will occur over the coming 12 months, Mr Partridge said.
He said the outlook for 2008 was positive, with an improved investment performance and solid land and development profits likely to offset any decline in building products caused by recent and further interest rate rises.
Chairman Robert Milner defended the company's strategy of combining non-cyclical income from investment and land and development with a building products business.
He said this had enabled Brickworks to outperform the Australian Securities Exchange over the last 10 years.
"Various models being floated for the company's divestment of its holding in Washington H. Soul Pattinson were factually incorrect and misguided on the return to shareholders," he said.
"During the year, Brickworks investment in Washington H. Soul Pattinson increased in value by $217 million."
Brickworks' new flagship plant at Wollert in Victoria, was up and running close to design capacity with good feedback from customers on the range, quality and improved packaging.
Australia's largest brick manufacturer made a final year profit for the 2006-07 year of $107.5 million and the final dividend of 26c per share fully franked will be paid on December 3.
Brickworks is Australia's largest brick maker and it pointed out that there will be another shortfall between housing starts and demand over the next year.
The company put demand for new houses at around 175,000 and actual starts at around 148,000.
The company's shares rose 5c to $13.59.
