Australia’s largest bricks manufacturer since the 1930s, Brickworks [ASX:BKW], has shared its half-year report, for the six months leading to 31 January.
Among the highlights, BKW announced record adjusted net profit of $410 million, and sales growth of 13%.
As a result, the group was able to lift its dividend to 23 cents a share.
Brickworks was moving up very slightly in share price following the update, backing the value of the stock to $23.04 a share.
Over the past month, BKW has taken a 4% discount, yet it still stands at just short of a 6% increase over the full year:
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Brickworks achieves record earnings
Australia’s oldest brickworks and diversified building resources manufacturers have posted results for the first six months of fiscal 2023.
Among the results were some favourable numbers, with the group presenting a record in underlying NPAT (net profit after tax) of $410 million, and statutory NPAT of $354 million.
Total revenue had climbed 13% from $515 million in the first half of 2022, to $584 million for the latest half year.
Underlying EBITDA (earnings before interest, tax, depreciation, and amortisation) grew even further, by 25% from $487 million to $607 million.
Earnings were boosted by steady sales in building products, with the group drawing particular attention to an uplift to North American sales, which were said to have offset a shortfall in Australia.
Also, by the end of the half year, the group recorded a gross asset base of more than $6 billion.
BKW said its property division was once again a particular standout by highlighting the sales of Oakdale East Stage 2 into its Industrial JV Trust with Goodman Group.
The group was able to declare a healthy dividend of 23 cents, 5% up from the dividend distributed the same time the year before. The latest dividends also represent 47 years of consecutive increases in dividends.
Lindsay Partridge, Brickworks Managing Director, commented:
‘Despite increasing interest rates, we are continuing to experience strong demand for prime industrial property.
‘In response to the rising interest rates, we have taken a pro-active strategy to reduce gearing within our Property Trusts, by retaining some funds that may otherwise have been distributed. As a result, gearing across the Property Trusts is now down to 21%, from 24% six months ago.’
Brickworks outlook
The building company didn’t have financial guidance for the rest of fiscal 2023, however, the CEO did touch on an expectation for the Australian business to slow in coming months.
Despite revenue having climbed 11% in the six-month period, Australia’s EBITDA was down 6% to $50 million for the first half, which the group said was mostly due to a decline in its roofing and Austral Bricks sales, with most other business recording an uptick in earnings.
Despite ongoing cost inflation and labour shortages, the North American business managed a 16% uplift with operations utilising broader end market exposure expects to benefit from strength in the non-residential market.
Mr Partridge concluded:
‘The development pipeline is strong, and we expect a significant increase in rental income over the coming years as new developments are completed and rent reviews are undertaken.
‘Across both countries, manufacturing costs will benefit from the extensive plant rationalisation and upgrade activities completed over the past few years.’
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Regards,
Mahlia Stewart
For Money Morning
