Mega Australian and North American-based building products and manufacturing company, Brickworks Ltd [ASX:BKW], put out its latest trading update.
A new record for underlying Net Profit after Tax (NPAT) was achieved for FY22, a whopping 159% increase totalling $746 million.
Revenue climbed 28% year-on-year, bolstered by North American revenue which ‘almost doubled’.
‘The strength of our diversification strategy underpinned the result in FY22, with increased underlying earnings delivered across all four divisions,’ BHW’s chairman had stated.
The company’s stock price barely lifted more than 1%, however, and in the year so far, BKW’s share price has dropped more than 12%.
Brickworks provides update on trade
Today, the materials company was proud to announce its 159% increase in NPAT, $746 million achieved across the 2022 fiscal year.
Adding in certain other ‘significant’ items, as well as a discount on its operations, the company upped its statutory NPAT to $854 million, representing a 257% increase year-on-year.
BKW reported underlying earnings growth was shared across all divisions with particularly strong growth in North America.
Revenue of $1.093 billion was up 28% year-on-year, driven heavily by North American demand, where revenue ‘almost doubled’.
EBITDA from continuing operations totalled $1.058 billion, up 133%, representing the first year to surpass $1 million.
Investments delivered an underlying earnings contribution of $181 million, up 86% year-on-year.
Debt was subsequently reduced by 15%, and the company decided to increase dividends by 3% from 41 cents a share (fully franked) to 63 cents.
Brickworks’ Chairman Robert Millner pointed out that the company’s record earnings were achieved even as various challenges impacted the sector; from inflation, rising cost of doing business, a gas supply crunch and general ‘extreme volatility’ in the market also pushing prices higher.
Millner also said BKW relies heavily on natural gas which ‘cannot be easily substituted for alternative renewable energy’, a constant concern when gas supplies are not readily available.
Nevertheless, during the year Brickworks gained $1.8 billion in net assets across JVs with Goodman Group, including its Manufacturing Trust, which was launched in July, and merged WHSP with Milton, which has a $10 billion market cap and offers further assets.
BKW also expects strong rental growth and renewed leases are also expected to offset negative impacts of rising interest rates.
Brickworks revealed Board Director Robert Webster will be retiring after 21 years, and new Non-Executive Director Joel Fitzgibbon is to join the Audit, Risk, Renumeration, and Nomination Committees from January.
BKW’s project pipeline, cash and assets to offer support
Brickworks’ Managing Director Lindsay Partridge expressed 2022 held healthy demand for the company’s prime industrial property, fuelled further by long-term structural tailwinds.
The company will also focus on building vacant land at Oakdale West Estate and expects to sell Oakdale East Stage 2 for $300 million in the first half of FY23, with three more properties in the pipeline for coming years.
Brickworks also signed a supply agreement last month with Brickability, representing a new opportunity to grow into the UK market.
The company expects a soft period to commence once existing pipeline work is completed with housing demand slowing in Australia, but hopes resilience shown in the North American sector might protect general business.
Nonetheless, the company takes its ‘strong financial position’ and diverse asset portfolio as good insulation against slowing markets, and for funding future operations hoped to grow its market share.
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For The Daily Reckoning Australia