Brickworks slumps on lower earnings guidance

The news: Construction materials supplier Brickworks has flagged one-off non-cash impairment and warned of lower earnings from its North America business as challenging conditions have continued in the first half.

The numbers: The company will recognise a post-tax non-cash impairment charge of $55 million to Brickworks North America in its first-half results later this month. It said earnings from Building Products North America will be significantly lower, while that from Building Products Australia is likely to be in line with the year-ago period. Property earnings will be higher, while investment earnings are yet to be finalised, it said.

The context: Brickworks attributed the impairment to a review of the carrying value of its assets as at 31 January. It said challenging market conditions in North America have continued, driving a 13% reduction in first-half revenue from the business compared to the prior corresponding period. Strong competition in the retail segment has resulted in the loss of some market share at its store network, while the reduced demand has necessitated plant shutdowns to control inventory levels. The subdued building activity and scaled back production will also delay the realisation of benefits expected to be delivered from plant rationalisation and upgrades in recent years.