The nation’s largest brick and tiles maker Brickworks has nearly doubled its annual profit and says the housing and construction sector is recovering.
Brickworks expects its building products division to grow earnings again in the year ahead, with Austral Bricks sales and order volumes in the first six weeks of the fiscal year up 20 per cent on the same time in the previous year.
Brickworks made a net profit of $85.2 million in the year to July 31, up from $43.3 million in the previous year, when the company incurred a substantial writedown on several businesses.
Managing director Lindsay Partridge said loans to build new houses or buy newly built homes had moved steadily higher all year.
Housing affordability had also improved and consumer confidence is tipped to rise now the federal election is over, he said.
“Most indicators point towards improving demand in the year ahead,” Mr Partridge told AAP.
Estimated new housing starts were up 5.9 per cent in the year to the end of June, to 153,912.
The gains have been driven by work in NSW and Western Australia, Mr Partridge said.
New housing starts are still well below the 30-year average, and Queensland is tipped to pick up due to new incentives, so there is plenty of recovery to come, he said.
Brickworks’ improved performance was also driven by higher brick prices and sales of several properties, with its land and development division’s earnings soaring to $49.6 million, up from $19 million the previous year.
Brickworks’ cross shareholding structure with the Washington H Soul Pattinson conglomerate – where both companies are the other’s largest shareholder – cost it money in 2012/13, with earnings from investments of $60 million down from $67.7 million.
Robert Millner, chairman of both companies, rejected recent calls from other major shareholders to end the cross-ownership to unlock value.
He told AAP he had received legal and financial advice that capital gains tax would swallow up any gains to shareholders.
Soul Pattinson’s profit slumped by 26 per cent to $105.4 million in the year to July 31.
Brickworks shares gained 35 cents, or 2.8 per cent, to $12.85.