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Investing.com -- Brickworks Ltd (ASX:BKW) has impaired the value of its U.S. business for the second time in six months, citing weaker demand and policy changes that could drive up construction costs.
The Australian building-materials supplier said Tuesday that its revenue at its North American operations dropped 13% in the six months through January, delaying hopes of a sales recovery.
The company’s shares closed nearly 7% lower in Australia trading.
“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,” the company said.
Brickworks entered the U.S. market in 2018 with the $110 million acquisition of Glen-Gery and expanded further through additional takeovers.
While it has invested in upgrades and rationalizations, the company now expects benefits from those efforts to take longer to materialize due to lower demand and scaled-back production. It also pointed to strong competition eroding market share at its retail stores.
The company said it will record a A$55 million (US$34.5 million) non-cash impairment on its U.S. business, following A$123.5 million in write-downs last year, with more than half tied to North America.
Plant closures announced in September and extended in November will weigh on results, with U.S. earnings for the January half set to be well below the A$21 million reported a year ago.
Meanwhile, its Australian building-products business remains more stable, with first-half earnings expected to be flat as cost cuts and portfolio rationalization offset lower sales.
Real-estate earnings are set to rise, with no major change to the value of its property trust.
Brickworks will report its first-half results on March 20.