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24-09-2015, 10:13 PM
Housing boom not over yet: Brickworks CEO
Kylar Loussikian
[Image: kylar_loussikian.png]
Journalist
Sydney
[Image: 750454-cc7cf16e-62a3-11e5-afef-4942db4d24a5.jpg]
Brickworks chief executive Lindsay Partridge. Picture: Britta Campion Source: News Corp Australia
[b]Australia’s home building boom would continue for longer than many market analysts expect, Brickworks chief executive Lindsay Partridge said as he announced a slid in net profit to $78.1 million for the financial year ending June.[/b]
Mr Partridge said key markets in NSW had been undersupplied for a decade, a situation that would take years to reverse.
Those comments are significantly more bullish than market consensus, with UBS estimating a peak of around 210,000 housing starts this year, falling to 175,000 by 2017.
Forecaster BIS Shrapnel also expects residential building to moderate by the end of the year, with commencements falling 6.2 per cent by next December. Despite this, building starts will remain significantly above the decade average.
“Every other housing boom has come to an end because of a credit squeeze,” Mr Partridge said.
“I don’t think anybody is forecasting a credit squeeze. What will happen in every other state bar NSW is that they will build out the demand in a couple of years.
“NSW has a much bigger backlog and I think it will be a number of years before we build the demand out,” he said.
Mr Partridge was speaking after Brickworks announced a 24 per cent fall in net profits, pushed down by a $10m goodwill writedown at its Austral Precast business, a $6.7m writedown of log licences at its Auswest Timbers division, and a $25.1m hit on investments related to Washington H Soul Pattinson.
Despite the fall in statutory profits, Brickworks increased its final dividend by 2c to 30c a share, taking full-year dividends to 45c per share. Shares fell marginally, closing 13c lower at $15.24.
The company’s Austral Bricks division delivered a 40.5 per cent increase in earnings, buoyed by an increasing use of brick in high-rise apartment developments.
Brickworks reported strong levels of supply from builders, with Mr Partridge yesterday telling investors new housing approvals suggested building activity could rise again in the next six months.
After the investor presentation, Mr Partridge said: “For every block that comes up for sale (in NSW), there are at least 10 people in line to buy it, and that would indicate that the demand is a long way from being satisfied.
“Part of that is a 10-year lull in NSW and the volume in there, there’s a massive number of people who would like to buy a house, but the backlog is about 100,000 and with a construction rate of 62,000 and a demand of 45,000 you can work out that there’s a lot of years of work to pull that back.”
Mr Partridge said the Austral Precast division, which had targeted the industrial warehouse sector, would be repositioned to focus on the residential market after recording flat sales in NSW and Victoria. The company’s property division reported marginally higher earnings in the financial year ending June, up 3.1 per cent to $64.4m.
- THE AUSTRALIAN
- SEPTEMBER 25, 2015 12:00AM
Kylar Loussikian
[Image: kylar_loussikian.png]
Journalist
Sydney
[Image: 750454-cc7cf16e-62a3-11e5-afef-4942db4d24a5.jpg]
Brickworks chief executive Lindsay Partridge. Picture: Britta Campion Source: News Corp Australia
[b]Australia’s home building boom would continue for longer than many market analysts expect, Brickworks chief executive Lindsay Partridge said as he announced a slid in net profit to $78.1 million for the financial year ending June.[/b]
Mr Partridge said key markets in NSW had been undersupplied for a decade, a situation that would take years to reverse.
Those comments are significantly more bullish than market consensus, with UBS estimating a peak of around 210,000 housing starts this year, falling to 175,000 by 2017.
Forecaster BIS Shrapnel also expects residential building to moderate by the end of the year, with commencements falling 6.2 per cent by next December. Despite this, building starts will remain significantly above the decade average.
“Every other housing boom has come to an end because of a credit squeeze,” Mr Partridge said.
“I don’t think anybody is forecasting a credit squeeze. What will happen in every other state bar NSW is that they will build out the demand in a couple of years.
“NSW has a much bigger backlog and I think it will be a number of years before we build the demand out,” he said.
Mr Partridge was speaking after Brickworks announced a 24 per cent fall in net profits, pushed down by a $10m goodwill writedown at its Austral Precast business, a $6.7m writedown of log licences at its Auswest Timbers division, and a $25.1m hit on investments related to Washington H Soul Pattinson.
Despite the fall in statutory profits, Brickworks increased its final dividend by 2c to 30c a share, taking full-year dividends to 45c per share. Shares fell marginally, closing 13c lower at $15.24.
The company’s Austral Bricks division delivered a 40.5 per cent increase in earnings, buoyed by an increasing use of brick in high-rise apartment developments.
Brickworks reported strong levels of supply from builders, with Mr Partridge yesterday telling investors new housing approvals suggested building activity could rise again in the next six months.
After the investor presentation, Mr Partridge said: “For every block that comes up for sale (in NSW), there are at least 10 people in line to buy it, and that would indicate that the demand is a long way from being satisfied.
“Part of that is a 10-year lull in NSW and the volume in there, there’s a massive number of people who would like to buy a house, but the backlog is about 100,000 and with a construction rate of 62,000 and a demand of 45,000 you can work out that there’s a lot of years of work to pull that back.”
Mr Partridge said the Austral Precast division, which had targeted the industrial warehouse sector, would be repositioned to focus on the residential market after recording flat sales in NSW and Victoria. The company’s property division reported marginally higher earnings in the financial year ending June, up 3.1 per cent to $64.4m.