Brickmaker Wienerberger raises capacity for UK housing revival

VIENNA, July 17 Thu Jul 17, 2014 6:44am EDT

VIENNA, July 17 (Reuters) - Wienerberger, the world's biggest brickmaker, is increasing its capacity in Britain to meet rising demand for housing driven by government schemes, it said on Thursday.

The Austrian company said it would produce an extra 200 million bricks per year, enough for about 25,000 new homes, by reactivating mothballed factories, investing in technology upgrades, adding work shifts and new jobs and importing materials from Europe.

"Government initiatives including the Help to Buy Scheme have led to a revival of the housing market and a significant increase in construction activity," it said in a statement.

The company stuck to its full-year guidance for 300 million euros ($406 million) in earnings before interest, tax, depreciation and amortisation (EBITDA), saying higher demand in Britain was balanced by a weaker Netherlands and France.

Schemes such as Help to Buy, which widens access to mortgage finance to home-buyers unable to pay large deposits, have encouraged developers to press ahead with projects - as have low interest rates and a sharp rise in house prices.

The monthly Markit/CIPS purchasing managers' index for the British construction sector, a measure of construction activity, rose to 62.6 in June from 60.0 in May, its highest level since February and well above the forecast for a fall to 59.5.

Readings above 50 represent year-on-year growth in activity, and those below 50 point to contraction.

Home-building was the fastest-growing sector, with the biggest pick-up in activity since January.

Barratt Developments, Britain's biggest housebuilder by volume, said last week it expected its full-year profit to more than double to about 390 million pounds ($667 million) thanks to a buoyant housing market.

However there have been some signs that Britain's housing market is cooling. Mortgage approvals in May fell to their lowest level in 11 months, in part due to tighter affordability checks that lenders have been required to apply since April. Surveyors have also reported slower conditions.

Wienerberger cited an estimate that there would be 165,000 housing starts in Britain this year, an increase of more than 23,000 units from last year. It had no immediate comment on the size of its investment or how many people it would hire.

($1 = 0.7390 Euros; $1 = 0.5844 British Pounds) (Reporting by Georgina Prodhan; Editing by Pravin Char)