Brickworks laments Victoria shutdown but lifts earnings after NSW comeback

Brickworks’ boss laments the swift closure of Victorian construction, as NSW sales recover after lockdown hit.

Brickworks has increased its underlying profit on the back of a strong construction market. Picture: iStock

The boss of the nation’s biggest brickmaker, Brickworks, has lamented the sudden shut down of Victoria’s construction industry, which has sparked violent protests across Melbourne, but believes once the economy is reopened there will be a strong rebound in building activity.

“I feel that there should have been more consultation with industry and a greater notice, it was very difficult I’m sure for everybody and it wasn’t good for us, we had to stop our (bricks) dispatches overnight,” Lindsay Partridge said.

Mr Partridge said he had some issues with making vaccines mandatory in the construction sector.

“I do think that is an issue about ethics, there have been things about forcing things on people, and I think it is far better to create encouragement, trying to encourage people to get vaccinated, do it willingly and I am hopeful in our own workforce we will get to such a high (vaccination) percentage that we won’t need to consider that.

“If there was more industry consultation (in Victoria) they might have been able to talk to those sites or close down the sites where there has been infections, that would have been the normal way to handle it but talk to people about the importance of taking measures.”

He said in New South Wales it had taken between six and eight weeks for the industry to regain its momentum when construction was opened up again, and he expected a similar timeline for Victoria but that the wider economic settings for building and construction remained robust with plenty of pent up housing demand.

It came as Brickworks unveiled a 20 per cent slide in full-year net profit to $239m on Thursday. The annual profit was pushed lower partly by significant items and running up against last year’s record result that included a one-off profit from its shareholding in Washington H Soul Pattinson.

Lindsay Partridge says there ‘should have been more consultation’ on Victoria’s snap construction shutdown but says the industry will bounce back. Picture: Hollie Adams

Revenue for the year, drawn from its portfolio of building products business, both in Australia and North America, as well as its bulging investment portfolio dominated by Australian equities and industrial property, fell 6.28 per cent to $890.313m.

The company did post a record underlying profit of $285m however, up 95 per cent, on the prior year, backed up its large, historic stake in investment house Washington H Soul Pattinson, now valued at $3.4 billion, and a 50 per cent share in an industrial property trust valued at $911m. The value of that 39.4 per cent stake in Soul Pattinson grew by $1.2bn during the year and the property trust value rose by $184m.

Earnings from its various investment activities rose 91 per cent to $97m while property earnings lifted 95 per cent to $253m.

Mr Partridge said while the snap two-week lockdown of construction in Victoria had triggered an 80 per cent slump in brick sales that was countered by the resurgence of New South Wales as it emerged from lockdowns, and where his building products sales were back to around 90 per cent of pre-Covid levels.

Such was the returning strength that Brickworks had restarted its second kiln at Plant 3, Horsley Park, that had been temporarily shut down in late July due to the crushing impact of widespread restrictions while at its burgeoning North American business sales momentum had restarted following the traditional summer holiday period.

“In the short term significant uncertainty persists, with the potential for new restrictions remaining ever present across all states,” Mr Partridge said.

“However, with vaccination rates across the country now approaching government targets, we are hopeful that by the second half of the financial year, the prospect of any further restrictions will be behind us, and all states will experience an elevated period of activity.”

He said recent history had shown that pent up demand for housing and construction would quickly surface when restrictions were relaxed.

“Well we have seen things in New South Wales virtually return to where they were before the shut down, it has taken six to eight weeks to get back on speed and I would anticipate a similar timeline for Victoria once they allow construction to recommence.

“I think consumer confidence is very strong, obviously because of shortages of timber and trades and cost increases etc, as well as these shutdowns, it is going to take longer to build these homes … but I think things are very strong.”

Due to Soul Pattinson’s recent acquisition of investment company Milton, Brickworks stake in Soul Pattinson will reduce to 26.1 per cent, its lowest level in almost 50 years when the cross-shareholding between the two companies was created.

Brickworks declared a final dividend of 40 cents per share, fully franked, an increase of 1 cent compared to the previous final dividend. The record date for the final dividend is November 3, with payment on November 24. Brickworks has maintained or increased normal dividends for the last 45 years.

Shares in Brickworks ended up 59 cents at $25.06.

Originally published as Brickworks laments Victoria shutdown but lifts earnings after NSW comeback