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World's biggest brickmaker delivers profits warning

The collapse in UK housebuilding activity contributed to a profits warning by the world's biggest brickmaker today.

Austrian giant Wienerberger, which makes nearly 10 billion bricks a year, said its first half underlying earnings would be 10 per cent lower than the prior year due to the global economic downturn, including in the UK.

UK revenues account for around 7 per cent of Wienerberger's total, which came in at £2 billion last year. The company recently mothballed two of its 17 UK factories - Ewhurst in Surrey and Plymouth - with the loss of 80 jobs.

A mortgage famine has hit new home sales and building activity across the country. The Home Builders Federation has estimated that between 80,000 and 120,000 homes will be built this year, compared to 190,000 in 2007. The UK's major firms have announced 5,000 job cuts in the past week alone.

In its explanation of the profits warning Wienerberger also spoke of shrinking activity elsewhere in the world. The contraction in the US market was stronger than expected, it said, with a 40 per cent drop in housing starts since the beginning of the year.

There was also "no recovery" in sight for Germany and "weaker momentum" across parts the Czech Republic and Hungary. But demand for new bricks in Russia and Poland remained high, the group said.

Wienerberger, which operates 263 plants in 26 countries, predicted a year-on-year profits decline for the full year 2008. Last year underlying profits came in at £437 million.