Australian bricks joint venture gets under way
CSR and Boral confirm formation of previously announced east-coast bricks joint venture
BORAL Ltd and CSR Ltd have confirmed the formation of the previously announced joint venture combining their Australian east-coast brick operations.
The joint venture commenced operations on 1 May 2015 as Boral CSR Bricks Pty Ltd, trading initially under the existing brick brands of Boral and PGH bricks.
Reflecting the relative valuation of the two businesses, the joint venture is owned 60% by CSR and 40% by Boral, and includes operations in New South Wales, Victoria, Queensland, South Australia, Tasmania and the ACT.
There is no cash consideration as part of the formation of the joint venture, aside from typical completion adjustments.
The Boral CSR Bricks joint venture can produce in excess of 600 million standard brick across 12 manufacturing operations and, on a pro forma basis, had a combined annual turnover of approximately A$270 million for the 12 months ended 31 December 2014.
Following integration, initial overhead savings of A$7–A$10 million per annum are expected as a result of consolidation of management structures and efficiency gains in sales and administration functions. Integration will be completed over the next 12 months.
Nick Pezet (pictured) has been appointed as executive general manager of the Boral CSR Bricks joint venture, reporting through to the joint-venture board. Mr Pezet brings more than 20 years’ experience in the brick industry in a career that spans operations, sales and management roles in the UK, New Zealand and Australia, most recently as executive general manager of CSR’s Bricks and Roofing businesses.
Given the nature of the joint-venture agreement, including CSR’s 60% shareholding, CSR will consolidate the joint venture into their Group balance sheet and net profit with effect from 1 May 2015, while Boral will recognize their earnings contribution on an equity accounted basis also commencing 1 May 2015.