Building Products

The Building Products division recorded growth in operating earnings before unusual items of 23 percent to $76 million, up from $62 million earned in the previous corresponding period.

Operating earnings for the plasterboard business were down 15 percent as a result of continued weakness in the New Zealand residential construction market, albeit signs of improvement were evident towards the end of the period. The effect of restructuring on manufacturing and overhead costs helped to alleviate this impact.

The insulation business grew operating earnings before unusual items by 65 percent due to the effectof the government stimulus packages in Australia and New Zealand on volumes and manufacturing efficiencies. This was partially offset by weaker demand in the New Zealand non-residential construction sector impacting the commercial insulation and ceiling and wall systems business.

In Australia, the government stimulus package led to a dramatic increase in glasswool insulation demand. Toward the end of the period a series of government steps reduced the stimulus package and lowered the individual household rebate.

The government subsequently announced in late February the immediate termination of the scheme, which will impact insulation earnings in the second half.

The government has indicated that a replacement scheme requiring home-owner contributions will likely be introduced later in the year.

Operating earnings for the roof tiles business were up 2 percent on the previous corresponding period. Favourable global steel prices, strong volumes into Africa, improved volumes in New Zealand, and a strong price and product mix in the United States, were largely offset by the impact of a strong New Zealand dollar on export returns and weak volumes in most export markets particularly in Europe and Japan. Normalisation of operations at the United States plant following a serious plant fire in the previous year also contributed to an improved result.

Operating earnings for the Australian based sinkware business and the New Zealand based aluminium business were up on the previous corresponding period. The sinkware business managed to offset weakness in its domestic and export markets with strong cost control and a focus on higher value products. The aluminium business experienced significant improvements in its core domestic volumes, improved margins and lower aluminium input prices, although export and commercial markets were weaker.