Brickworks boss Lindsay Partridge warns Australian economy could be ‘trashed’ by emissions targets

Brickworks boss Lindsay Partridge fears jobs, lives and businesses will be ‘trashed’ by the government forcing through unrealistic net zero emissions targets.

Brickworks CEO Lindsay Partridge: ‘There is no use going to renewables if we trash the economy and trash people’s jobs trying to get there.’ Picture: Hollie Adams

Brickworks boss Lindsay Partridge fears jobs, lives and businesses will be “trashed” by the government forcing through unrealistic net zero emissions targets, while the manufacturing head has also warned of a “second supply chain” shock from European factories shutting down due to a looming winter energy crisis.

Several bricks and roof tile makers in Italy and Spain have already shuttered their manufacturing sites as the gas shortage and rampant gas prices in Europe crunches businesses, strangling the supply of premium building materials to Australia.

“We are running off our supply line at the moment, but if they don’t get running again soon in a reasonable period of time that is going to be a problem,” Mr Partridge said.

Meanwhile, the nation’s largest brickmaker, a major energy user across its Australian kilns and manufacturing sites, has reduced its carbon emissions by 40 per cent since 2005 and Mr Partridge believes it can make its 2030 emissions targets.

However, he said he hoped “sanity prevailed” as the federal government and policymakers set about transforming the economy and energy markets to reach emission benchmarks and drive a pivot to renewable energy.

“The biggest concern all manufacturing has in Australia is number one, having reliable energy. Number two is having it reasonably priced and the third priority is going to be making it renewable,” he said.

“And there is no use going to renewables if we trash the economy and trash people’s jobs trying to get there.

“It is counter-productive to say we are going to get net zero by trashing people, occupations and destroying companies. The idea is to get there with reliable energy first, reasonably priced and then make it renewable – but get them in that priority.”

Brickworks on Wednesday posted a 257 per cent leap in its full-year net profit to a record $854.39m as its vast industrial land holdings across western Sydney and Brisbane, that form the core of its property portfolio, ­supercharged its profitability to eclipse earnings from its Australian and US bricks and building materials business.

Demand for bricks in Australia and the US has been strong, although constrained in the first half by lockdowns and in the second half by wet weather on the Australian east coast. Picture: Liam Kidston

Its $4.2bn joint venture property arm with Goodman – which in the 2022 financial year delivered Brickworks earnings of $644m, up 155 per cent – has helped Brickworks increase its final dividend to 41c a share, against 40c last year. It will be paid on November 29. It continues the company’s 46-year record of maintaining or increasing dividends.

But Mr Partridge is cautious of the economic headwinds lashing the global economy and in particular the renewed threat to supply chains.

In November last year, Brickworks warned that heavily disrupted global supply chains and shipping routes were so crippled by the Covid-19 pandemic that its factories had come within weeks of running out of the pigment used to colour bricks.

On Wednesday, Mr Partridge revealed those supply chain shocks had not gone away as the pandemic had begun to wane, and that he was now worried key building materials supplies he sourced from Europe could dry up as factories there were being mothballed in the face of rocketing energy prices. And this could get worse as winter came.

“We are concerned that there could be a second shock coming out of Europe,” Mr Partridge said.

“A lot of those products are made in Europe, both for Australia and the United States, and with the gas shortages there in Europe that is a concern.

“We do have three or four suppliers of bricks and roof tiles in Italy and Spain and most of those have closed down their production already for their winter. And that’s why there could be a second supply shock.”

To combat inflation, Brickworks has pushed through price increases for its bricks and other materials of about 8-10 per cent and, while lockdowns and construction constraints flattened demand for building materials in the first half, the wet weather in the second half of 2022 has also dented demand.

But any issues at its building materials arm is more than countered by its giant property book. According to Brickworks’ latest full-year results, property contributed 60 per cent of total group earnings, with its investment portfolio delivering 17 per cent of earnings, building products in Australia contributing 19 per cent and its North American bricks business delivering 4 per cent.

Brickworks’ key investment is a 26.1 per cent stake in listed investor Washington H. Soul Pattinson. “Although we are facing an increasingly uncertain outlook, including rising interest rates and recessionary fears, we are confident that Brickworks’ diversified portfolio of assets is well-placed to meet any future challenges and continue to deliver strong performance for shareholders,” Mr Partridge said.

The company said on Wednesday that revenue rose 28 per cent to $1.093bn for the 12 months to July 31, as Brickworks harvested dividends from its equities portfolio, its large investment in Soul Patts and the company’s rapidly growing property and land joint venture with Goodman.

Its burgeoning brickmaking business in North America continued to gather pace, while in Australia its flagship local building products arm also reported strong underlying demand.

At its Australian building products arm, revenue lifted 7 per cent to $694m as earnings rose 220 per cent to $153m. Sales in Sydney and Melbourne were ­affected by construction restrictions in the first half while wet weather along the east coast in the second half reduced activity and sales.

Earnings from its North American bricks business increased 192 per cent to $25m.

Brickworks shares closed up 8c, or 0.4 per cent, at $21.77.