Brickworks says it has laid off staff as it suffered a 10% slide in its Australian sales revenue over the last four months.
The 200 redundancies in its US and Australian businesses have come in response to the COVID-19 pandemic.
In a trading update released to the ASX on Tuesday, the company confirmed that its Australian arm had produced positive EBIT (earnings before interest and tax) over the last four months, despite the economic slowdown caused by the coronavirus.
Most of the employees made redundant were in the US, where Brickworks has expanded rapidly over the past 18 months via a number of acquisitions.
The company said the impact of the coronavirus had accelerated the rationalisation of US plants that were already planned.
“Since the start of the year, we have let go over 200 employees. These redundancies represent around 10 percent of our workforce, and an annualised reduction in our cost base of around $20 million,” CEO Lindsay Partridge told a finance conference.
Sales revenue fell 10% in Australia but rose 26% in the US – mainly due to acquisitions made in the past year. But sales volumes in North America in April and May were down more than 30 percent from pre-COVID-19 levels which was a truer picture of the state of the business.
Brickworks had flagged an early impact of the virus in late March when it reported its January 31 first-half results and had forecast significant disruption and reduced demand for the remainder of the current financial year.
While the overall contribution from the US so far this year remains positive, the coronavirus has resulted in negative earnings in recent months, Mr. Partridge said in his presentation although profit margins remained positive in Australia.
Brickworks has reduced production to control inventories during the slowdown and besides the 200 job cuts, it has indefinitely deferred all non-critical capital expenditure.
Brickworks said the COVID 19 pandemic has so far had no material impact on its property trust rental income.
Investors liked the update and the shares rose nearly 2% to $15.93.
