Building Products

The Building Products division reported operating earnings of $56 million, down 26 percent on the $76 million earned in the previous corresponding period.

This was due in large part to the impact of the Australian government stimulus package on the insulation business in the first half of the previous financial year.

Operating earnings for the plasterboard business were down 3 percent after significant new product development, in a flat New Zealand residential construction market and competitive pricing environment.

Operating earnings for the insulation business were down 51 percent due primarily to the strong positive effect of the government stimulus package in Australia on volumes in the previous corresponding period, and in the current period the impact on pricing and manufacturing efficiencies of a large industry-wide over supply of batts stock arising from the termination of the scheme in February 2010. This was partially offset by the benefits obtained from a number of initiatives undertaken at the Melbourne plant in the second half of the 2010 financial year, albeit the full benefit of these initiatives will not be realised until stock levels and manufacturing volumes return to normal levels in the 2012 financial year.

Wet weather in Queensland and New South Wales also impacted the business in the latter part of the period, while in New Zealand weaker residential demand arising from a reduction in uptake of the government insulation retrofit scheme and weak new build construction also adversely impacted earnings. Despite continued weakness in the New Zealand non-residential construction sector, the commercial insulation and ceiling and wall systems business was up significantly with share gains and improved operating performance.

Operating earnings for the roof tiles business were down 22 percent primarily due to the receipt in the previous corresponding period of final insurance proceeds for the 2008 fire at the United States plant. Volumes were up in Africa, Europe and Asia, flat in New Zealand, and down in the US, with particular weakness experienced in the US and Europe toward the end of the period as harsh winter conditions and a deteriorating economic outlook impacted demand. Overheads were up on the back of significant new investment in product and development, while some exchange rate relief was experienced.

Operating earnings for the Australian based sinkware business and the New Zealand based aluminium business were up 22 percent on the previous corresponding period. Weakness in the sinkware business’ domestic market was offset by an improved export performance and a continued focus on higher value products. The aluminium business experienced significant improvements in its core domestic volumes and margins on the back of share gain and a strong manufacturing performance, although export and commercial markets were weaker.