Australia's largest maker of bricks and tiles expects a housing boom on the east coast to stay strong for another two or three years, provided there is no major government intervention in the market.
House building activity across the country has continued to expand in the past year, despite tightening of lending criteria for property investors and warnings about levels of exposure from the central bank.
Soaring home prices are now prompting federal and state governments to consider measures to cool the heated market, including limiting negative gearing or capital gains tax concessions.
"We think growth in NSW and Victoria can run for another two to three years, provided there are no knee-jerk reactions from government," Brickworks managing director Lindsay Partridge said on Thursday.
His comments came as the building products group reported a 35 per cent jump in half-year profit to $104.1 million.
Excluding significant items, underlying net profit for the six months to January 31 rose 48 per cent to $111.2 million, amid higher profits from the sale of land and an increase in investment earnings.
Brickworks posted record first-half revenue of $370.2 million at its main building products division, driven by strong residential building activity in Sydney, Melbourne and southeast Queensland.
Earnings from the division rose 2.1 per cent to $33.3 million but were limited by a soft market in Western Australia, where the end of the mining boom and easing construction have impacted Brickworks' bricks and timber businesses.
"Given the current population growth on the east coast, we just can't foresee a dramatic fall in housing demand there," Mr Partridge said.
But he again warned that surging energy prices were weighing heavily on the bottom line, with the company's total yearly energy bill set to rise by $20 million within two years.
Brickworks recently secured gas supplies until 2020 at a 76 per cent price increase and has also seen electricity charges jump.
"We are looking at a number of options to offset - by installing new kilns and running existing plants as efficiently as possible but we are also looking at increasing imports or actually moving operations offshore," Mr Partridge said.
The company is evaluating the possibility of moving some brickmaking to New Zealand, Malaysia or South Korea.
Earnings from its land and development segment rose 48 per cent to $67.2 million, primarily due to the sale of land at Oakdale West in Sydney into its joint venture industrial property trust.
Earnings from associates and investments increased 77.6 per cent to $47.6 million.
Brickworks owns 42.7 per cent of investment group Washington H Soul Pattinson, which in turn owns 44.3 per cent of the building products maker.
Earlier on Thursday, Soul Pattinson reported a 56 per cent jump in half-year profit to $149 million, driven by higher earnings contributions from six of its seven major strategic investments.
Brickworks shares rose by one cent to $13.77.
BRICKWORKS HALF YEAR PROFIT JUMPS
* Revenue of $428.9m, up 19.1pct
* Net profit of $104.1m, up 35.4pct
* Interim dividend of 17 cents, up one cent
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