Sydney company Brickworks is planning to introduce a revolutionary new technology to Western Australia it believes will cut the cost of manufacturing bricks by 30 per cent.
The building products group announced today it had entered into an exclusive agreement with Colorado-based Direxa Engineering for the use of its skate-kiln technology.
The skate-kiln technology removes the need for kiln cars when manufacturing bricks, and has the potential to lower both the capital cost of building a new plant and brick manufacturing costs by 30 per cent.
“Brickworks has an exclusive agreement to utilise this skate kiln technology in certain markets in Australia, with Western Australia having been identified as a priority for deployment,” Brickworks said in a statement.
“Initial planning is under way for the construction of a new plant utilising this technology in WA, with a target commissioning date in the first quarter of the 2018 financial year.”
Brickworks also announced today that its Auswest Timbers business had recently completed the purchase of the previously closed Whittakers timber mill in Greenbushes.
Auswest will use the low-cost mill to process smaller-sized jarrah logs, and will transfer operations from the company’s Deanmill site.
Brickworks also said its Austal Bricks subsidiary planned to re-open its Cardup plant, south of Byford.
“A refit to automate the currently mothballed Cardup plant is now underway and will deliver a significant improvement in product quality and a lower manufacturing cost, due in part to this site benefitting from on-site clay services,” it said.
The news came on the same day Brickworks posted its best-ever first-half revenue of $358 million, with profit up 82 per cent to $76.9 million for the six months to December.
However, while the company’s order book for operations on the east coast remains strong, it says conditions in WA are deteriorating as building activity drops off.
“After reaching record levels in 2015, detached housing approvals in WA have now passed the peak and are declining sharply,” Brickworks said.
“Improved volumes delivered a positive EBIT impact of $2.4 million. Significant volume increases in most east coast operations was partially offset by declines in WA.”
That being said, the company’s Bristile Roofing subsidiary experienced a pickup inactivity in the state during the first-half, despite the sluggish property market.
Brickworks reported a 9.8 per cent increase in EBIT to $98.8 million, and declared an interim dividend of 16 cents per share.
“Improved earnings were achieved on the back of an increase in sales volume and prices, and improved production efficiencies that enabled manufacturing costs to be well contained,” the company said.
Overall earnings were lower in WA, as a result of a reduction in market activity and increased competition.
“As a result, sales volume decreased compared to the prior corresponding period, despite a small decrease in average selling prices,” it said.
“Prices in this market are now lower than they were seven years ago.”
Managing director
Lindsay Partridge said the strong result was also supported by the group’s success in combating the ongoing competition from alternative products.
“Our products are becoming increasingly popular in key market segments,” he said.
“For example, we have seen a significant increase in the use of face brick in high rise residential and commercial developments, on the back of our investment in high fashion and our strong links to the architectural community.”
However, Mr Partridge said further growth in sales volume would be limited by external constraints.
“Residential building activity is now at the highest level on record, driven by the major markets of Sydney and Melbourne,” he said.
“As a result, the industry has now effectively reached capacity in these markets due to bottlenecks caused by trade and product shortages.”
The group’s Austral Bricks business experienced strong price increases in all states except WA, while Austral Masonry and Austral Timbers suffered from strong competition in WA.
Brickworks closed 0.4 per cent lower to $15.68 each.
Source Businessnews
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