Brickworks flags $75m impairment to North American business
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The news: Building products group Brickworks expects to recognise a full-year impairment charge of around $75 million to its North America business, warning that second-half market conditions there have remained "significantly more subdued than anticipated".
The numbers: Brickworks said its Australia business is expected to deliver second-half earnings "slightly ahead" of its first-half result of $50 million.
Its North American building products division is set to deliver positive second-half earnings, with a "marginally positive" full-year result, weighed down by larger-than-expected decline in second-half market conditions.
The North American business achieved full-year earnings of $43 million in fiscal 2024.
The context: The company said that subdued market conditions have adversely impacted the short to mid-term outlook for its North American business, driven by elevated interest rates, high construction costs and suppressed consumer confidence.
Brickworks — which is set to merge with investment house Washington H Soul Pattinson following a 56-year cross-shareholding — said it could not provide any profit guidance ahead of its full-year result.
What they said: "The reduction in forecast demand, and the outlook for a slower than anticipated recovery in market conditions compounds pressure on earnings due to the underutilisation of our manufacturing facilities, resulting in diminished cost efficiency and margin compression," Brickworks said in an ASX release.
The source: ASX
