Closed borders risking manufacturing, Brickworks CEO Lindsay Partridge says

Brickworks CEO Lindsay Partridge has called for an end to state border closures, warning disruption is threatening economic recovery.

Brickworks CEO Lindsay Partridge. Picture: Adam Yip

The chief executive of the nation’s largest bricks maker Brickworks, Lindsay Partridge, has called for an end to the hotchpotch nature of state border closures, warning the disruption to industry and manufacturing was threatening job growth and the ultimate recovery of the economy once the health crisis has passed.

He labelled the border closures a “nightmare” and questioned why anyone in the current environment would invest in Queensland or Western Australia in particular.

Criticising the heavy restrictions in some states which has constrained the number of workers allowed at manufacturing sites, as well as restrictions on bringing in professionals from overseas or interstate, Mr Partridge said not all work could be done from home.

“It is ridiculous. There is only so much you can do on FaceTime,” Mr Partridge told The Australian after Brickworks unveiled its financial results for 2020, which showed a 93.27 per cent lift in statutory net profit to $298.9m.

“I have got big capital projects in Perth, in South Australia, thankfully I don’t have any big capital projects currently running in Queensland and it has been an absolute nightmare, almost impossible, to get our engineers in to undertake those works.

“So I have got a problem keeping our factories online because I can’t get the professional people in to do the work they need to do, I am having trouble bringing in people from overseas, specialists, so who would invest in Western Australia or Queensland if you can’t get your staff in? Forget it.”

Mr Partridge said the biggest challenge he now faced was the limited mobility of staff, which was being exacerbated by inconsistent border policies by state governments across Australia.

Turning to his building supplies operations, Mr Partridge said he was buoyed by a more bullish outlook for housing construction in both Australia and his recently new markets in the US, with the trend emerging in both countries of people moving out of the city and into regions where they were building detached homes.

“I think we are going to see a very solid year, but we need to fix those other fundamentals of immigration and students as soon as we can in the new year to try to avoid that bigger pothole down the road.

“I am not upbeat about inner-city apartments, I think they are going to suffer because we are seeing a lot of empty apartments with students going home and all the people here on two-year work visas going home.

“But I am very positive on housing and particularly in regional areas and first home buyers.’’

Brickworks, which sells a range of building supplies to the Australian and US markets, saw revenue for the 12 months to the end of July rise 4 per cent to $953m, with a strong contribution from its property business adding $94m in value for the year.

Brickworks’s rise in net profit included a one-off gain from the merger of TPG and Vodafone, the boost coming through its sizeable investment portfolio and cross-shareholding with Washington H Soul Pattinson.

In Australia, its flagship building products operations posted a 9 per cent fall in revenue to $687m as earnings fell 43 per cent to $33m. Despite the coronavirus pandemic disrupting operations the business has seen sales grow strongly in September as government stimulus pumps up spending.

Brickworks recently embarked on an expansion in the US, buying up three brick operations in North America. For fiscal 2020 Brickworks’ US operations delivered earnings of $10m, up 63 per cent.

Cash dividends totalling $56m were received from Soul Pattinson during the year.

Turning to outlook, Mr Partridge said the COVID-19 pandemic had only accelerated industry trends towards online shopping, and this was fuelling demand for the company’s prime industrial property.

Within building products in Australia, orders and sales had increased in September across most businesses, reflecting the various government stimulus measures. Feedback from home builders suggested the pipeline of activity was rising across the country.

With stimulus measures less effective in Sydney due to higher land prices and lockdowns still in place in Melbourne, conditions in these regions were expected to be more challenging.

In North America, the pandemic had impacted demand and could continue to cause rolling delays across the network. However, the improved efficiency and cost reductions delivered by plant rationalisations and upgrades were expected to result in improved earnings.

Brickworks directors declared a fully franked final dividend of 39c per share, up 1c, bringing the full year dividend to 59c, up 2c. The record date for the final dividend is October 15, with payment on November 25. The shares rose 1 per cent to $18.65