Australia’s largest brick and tile maker, Brickworks, says it has axed 17 per cent of its workforce and will close two more factories before Christmas due to the depressed housing market.
Brickworks managing director Lindsay Partridge criticised the Reserve Bank of Australia for not easing interest rates and blamed the GST and stamp duty for pricing young people out of the housing market.
The company announced on Thursday that its annual profit for the year to July edged up three per cent.
However, without significant items related to its cross ownership arrangement with Washington H Soul Pattinson (WHSP), Brickworks’ normalised net profit dropped nine per cent from the previous year to $100.8 million.
“Against all the odds it was still a pretty solid, robust result,” Mr Partridge told AAP.
“We’re against some pretty strong headwinds, particularly in building products, we don’t seen any respite coming our way.
“The federal government is almost unconcerned about the slow part of the Australian economy … yet the job losses keep mounting, that is a real worry.
“We’re also running into a train smash with a whole generation that can’t afford to get into the housing market.”
In July, loans to build or buy new homes in Australia fell, with Brickworks expecting a further 10 per cent reduction in new housing starts in the current financial year.
Brickworks has cut 239 employees out of 1500, with up to another 30 to go before the end of the year with brick factories in Melbourne and Sydney likely to be closed, Mr Partridge said.
The company has axed 74 workers in the last few weeks as it reduces manufacturing operations to find savings and meet lower demand, he said.
Fellow building products maker CSR laid off more than 100 workers in Victoria and NSW recently.
“The people we are losing are not fat or surplus, these are long term. One of our employees that left us last week was a 40-year veteran, that’s really very disappointing,” Mr Partridge said.
Earnings before interest (EBIT) and tax for the building products business were down by 21.3 per cent to $42 million.
There was also a drop in EBIT in its investment business with WHSP of 11.2 per cent to $67.9 million but a rise in land and development EBIT of 2.8 per cent to $29.2 million.
Building products would continue to be a major part of the business, but the share of brick-making would decrease and investment in precast concrete panels would increase, Mr Partridge said.
He said he was optimistic about the company’s long-term prospects, believing the housing sector would bounce back and through WHSP’s exposure to the booming coal industry.
However, the carbon tax would cost the company $12.8 million a year, he said.
The company maintained its final, fully franked, dividend at 27 cents per share, while its shares fell 14 cents to $9.26.
