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WA downturn has Brickworks looking east

AAP logoAAP 21/09/2016

Brickworks believes the east coast home building boom will see it through the current downturn in construction activity in Western Australia.

The building materials supplier's net profit was flat at $78.2 million on the back of a decline in building activity in WA.

BrickWorks posted a $68.9 million impairment charge after closing its Austral Bricks and Austwest Timbers plants in the state.

However, the building materials supplier's earnings rose 18.1 per cent to $195.9 million in the 12 months to July 31.

BrickWorks is much more optimistic about its building products business over the current year.

Managing director Lindsay Partridge said conditions were positive with residential building approvals at record highs, driven by strong population growth, low interest rates and rising house prices.

"The short term outlook remains positive, with a full order book and a long pipeline of work at higher margins in our major east coast markets set to support earnings in 2017," he said in a statement.

He said resilience of the east coast housing market was in stark contrast to the decline in building activity in WA.

But Mr Partridge said despite setbacks last year, the West remained an attractive market.

"Despite the current cyclical downturn, Western Australia has a strong and entrenched tradition of brick usage, with sales per capita being more than three times any other state in Australia," he said.

"As such we are making the necessary investments to upgrade our facilities and rationalise our brick operations in that state, starting with an upgrade to the Cardup brick plant. Completion of this project will be a key focus in the first half of financial year 2017."

The company was also positive about raising earnings through the sale of its Oakdale West property in Western Sydney next year and raising investment earnings and dividends over the longer term.

Brickworks shares closed up 17 cents or 1.3 per cent at $13.47.

BRICKWORKS FLAT RESULT:

* 2015/16 net profit up 0.1pct to $78.2m

* Revenue up 3.8pct to $751m

* Final dividend of 32 cents, fully franked, up from 30 cents

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