A sales slump has left Brickworks with mountains of unsold stock

The nation’s biggest brick maker, Brickworks, says the most severe restrictions on its business since the pandemic began have slashed sales.

‘The most severe restrictions that our business has faced since the onset of the pandemic,’ said Brickworks CEO Lindsay Partridge. Picture: Hollie Adams

The nation’s biggest brickmaker, Brickworks, says the most severe restrictions on its business since the pandemic began have slashed bricks sales, left it with mountains of unsold bricks at its yards and forced it to shut down production at a number of kilns to stop the overflow.

Managing director Lindsay Partridge told The Australian his manufacturing facilities spread across the country pump out more than 1 million bricks a day and with brick sales slumping by 80 per cent in the wake of the Sydney lockdowns he had run out of space to store his growing tower of bricks.

“We make a million bricks a day and if you sales fall by 80 per cent you can just imagine the mountain of bricks that we have built in the last three weeks, and we aren’t going to run factories and find somewhere else to store more bricks, that’s ridiculous. At least bricks aren’t perishable and I feel for people in the restaurant trade where they have perishable food,” Mr Partridge told The Australian.

Brickworks is one of the first major industrial and manufacturing companies to show the stress of the current Covid-19 lockdowns on its business operations, as parts of the economy begin to seize up and supply chains are either choked or heavily disrupted.

Brickworks said shutdowns of construction sites in Sydney in June and July had slashed brick distribution by as much as 80 per cent and although the building sector was given permission for a partial recommencement brick sales remained at only 50 per cent of pre-lockdown levels.

“The impact is similar across our other building products businesses. Operations at our precast facility in Wetherill Park have been significantly reduced, and we have removed one production shift at our roof tile plant in Brisbane that supplies the Sydney market,” Mr Partridge said.

He said the volatility and uncertainty in the broader economy and its own operations were swinging so wildly that Brickworks management had to rethink and recalibrate its kilns shutdown decision over the weekend five times before fixing on a final decision.

The brickmaker said it had been forced to trigger a shutdown process, with production at two of its five brick kilns in New South Wales curtailed, representing 30 per cent of total production capacity. As part of the multi-day shutdown process, kilns at Punchbowl and Horsley Park plant 3 were taken offline over the weekend. Plant 1 at Horsley Park, Bowral and the 2nd kiln at plant 3 remain operational, with significant production volume being transported south to meet the continued strong demand in Victoria, Brickworks said.

And the winds could change again at any moment.

“With the outlook across the entire country becoming increasingly uncertain, this could change at any moment.”

Brickworks says it’s been forced to shut down several kilns.

The kilns could be shutdown for as long as three months as Brickworks tries to shift its surplus bricks and sales pick up again in the construction sector, Mr Partridge said.

However, Brickworks was not planning any redundancies at this stage, he added.

“While we have been forced to temporarily reduce staffing across several manufacturing facilities, we have no intention of laying off any staff, and are committed to working closely with our valued and highly skilled employees to preserve their employment throughout this period of uncertainty.”

Brickworks also revealed on Monday it is facing the stalling of its own key infrastructure projects thanks to Covid-19 lockdowns and closed international borders, with one new site in outer Sydney built but unable to be commissioned as key technical staff remain stuck overseas and unable to enter Australia.

Work on a new brick facility at Horsley Park had been stopped due to the ban on all construction activity in the area which has been hit hard by the spread of Covid.

Brickworks, which in the last few years has also gone on an acquisition spree in the United States to make it the third biggest brickmaker in the region, also provided a trading update.

It said that while the recent shutdowns would have little impact on its full financial year — having started just two weeks before its financial year end — it was expecting softer earnings in the US.

The company warned that trading in July in the US was worse than forecast and will result in a fall in earnings in 2021.

“In the US everybody went on holidays, they were all cooped up and then all went on holidays and kids are on school holidays and everyone stops working, that‘s like our January.”

However, Brickworks is expecting a 35 per cent earnings gain for its flagship Australian building products arm while its property development business would record an EBIT of around $250m, near the middle of the range provided recently in a market update, and up from $129m recorded in 2020.

Brickworks shares fell 38c, or 1.5 per cent, to $24.79 on Monday.