CSR AND BORAL TO MERGE BRICK OPERATIONS
Written on the 4 April 2014
CSR Limited (ASX:CSR) and Boral Limited (ASX:BLD) will combine their brick operations on the east coast, to save money in a declining industry.
The joint venture is expected to save up to $10 million in costs each year, pending approval by the Australian Competition and Consumer Commission.BLD managing director and CEO Mike Kane says lower demand for bricks has resulted in reduced profitability and plant closures.
“The Australian cladding industry has faced major changes in demand over the past 30 years, resulting in a significant reduction in brick use.“This joint venture is aimed at driving efficiencies across the combined network of operations and would provide a path for Boral to realise acceptable returns for our brick business and therefore secure our long-term commitment to the industry,” he says.
The deal is expected to net $230 million in revenue annually, with CSR owning a 60 per cent stake and BLD on 40 per cent following a valuation.CSR’s managing director and CEO Rob Sindel says the aim is to keep manufacturing in Australia and maintain clay bricks as a product of choice in the market.
“It is about strengthening the opportunity for employees and reinvesting in the industry while delivering satisfactory returns through the building cycle,” he says.The proposal will merge operations in Queensland, New South Wales, Victoria, South Australia, Tasmania and the ACT.