US major has hope in local housing
Building adhesives business H.B. Fuller believes the cyclical downturn in the Australian residential construction sector could be bottoming out, raising hopes for the flat housing market.
It comes as many domestic residential and commercial construction manufacturers believe the market will remain subdued for some time, failing to return to levels seen before the global financial crisis.
H.B.Fuller chief executive and president James Owens said last week that Australia was still a weak link in the chain of the global company's operations but there were some signs of a turnaround.
"Our Australia business remains relatively weak, but year-over-year revenue was only slightly negative in the quarter, indicating that the negative trend in this region is bottoming out."
H.B.Fuller is a chemicals group that specialises in formulating high performance industrial adhesives, sealant products, paints and other specialty materials used in construction. Its products are used in homes from the floor to the ceiling, as well as for furniture, roofs, window frames and bathroom fittings.
Last month, US paints group Valspar said its Australian business, built around its popular Wattyl brand, had a 15 per cent decline in volumes for the first quarter due to weakness in the Australian housing market.
Big construction companies have turned the screws on costs in the face of a prolonged slump in housing. Boral, Australia's largest construction materials company, recently announced it would outsource 40 technology jobs. In January, Boral boss Mike Kane unveiled plans to retrench as many as 1000 employees to cut costs.
Boral posted a $25.3 million loss for the first half because of the weak market conditions and some restructuring costs. Stockland, Australia's biggest residential property developer, posted a $147 million loss for the first half, a worse than expected result.
But in March, RBA deputy governor Philip Lowe gave an upbeat speech about Australia's economic outlook, indicating the central bank was hoping for a smooth transition away from mining to non-mining investment-led growth and housing construction activity.