By Stuart Condie

SYDNEY--Australian building-materials supplier Brickworks impaired the value of its U.S. business for the second time in six months, pushing out the timing of a sales recovery amid a raft of policy changes likely to push up construction costs.

Brickworks on Tuesday said that revenue at its North America building products business had fallen 13% on year over the six months through January. Trade tariffs and other changes appear to have dashed any hopes of a near-term turnaround in demand.

"Uncertainty around the timing of the market recovery, factors such as labor shortages, elevated material costs, interest-rate uncertainty and geopolitical volatility has resulted in a moderation of the short- to medium-term outlook," Brickworks said.

Brickworks temporarily shuttered some U.S. plants to keep a lid on inventory levels before President Trump's January inauguration. But economists say that recently announced tariffs on Mexican and Canadian imports will make it more expensive to build housing, which could further weigh on activity.

Trump's immigration crackdown could also shrink the pool of construction workers, driving up pay that is already rising faster than wages in the wider economy. Half of ceiling-tile installers and 37% of roofers are undocumented, according to real-estate consultancy John Burns.

Founded in 1934, Brickworks entered the U.S. in 2018 with the US$110 million takeover of brick maker Glen-Gery. It later bolstered its North America operations with further acquisitions including of brick makers and supply centers.

It subsequently embarked on rationalizations and upgrades, but said Tuesday that lower demand and scaled back production would delay the anticipated benefits from the program.

Strong competition had also resulted in the loss of some market share by its retail store network, it added.

Brickworks will record a non-cash impairment of 55 million Australian dollars, equivalent to about US$34.5 million, against its U.S. business. It already recorded impairments of A$123.5 million in its July-half results, more than half of which came in North America.

Brickworks said the plant closures announced in September, and extended in November, meant that U.S. earnings for the six months through January--the first half of its 2025 fiscal year--would be significantly lower than the A$21 million it reported a year earlier. Brickworks is scheduled to report its fiscal first-half results on March 20.

Its Australian building-products business is proving more resilient. The company said that first-half earnings would be broadly flat, with cost reductions and portfolio rationalization offsetting lower sales.

Real-estate earnings will be higher compared with a year earlier, with no significant change to the value of its property trust.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

March 10, 2025 19:03 ET (23:03 GMT)

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