Brickworks Up on Record Earnings

Brickworks Up on Record Earnings

Brickworks [ASX:BKW] shares are up 4.27% today after hitting half-year record earnings.

Shares for Australia’s largest building materials manufacturer were trading at $22.72 at the time of writing.

Brickworks on track to $1 billion in revenues

For the half-year to 31 January 2022, Brickworks announced a record statutory net profit after tax (NPAT) of $581 million. This is a whopping 720% increase from the same period last year.

One of the main reasons for the big jump, though, was a one-off profit. This was the disposal of their Washington H Soul Pattinson shares after its merger with Milton.

Taking this out of the equation along with other one-off items, underlying NPAT came in at $330 million, still a nice 269% increase from the same period last year.

A big contributor was their property division, after assets from their Property Trust were revalued, turning out a $228 million profit from an increase in market valuation.

As Brickworks Managing Director Lindsay Partridge said:

We have seen strong demand and sustained growth in the value of our Property Trust over a number of years. The pandemic has only fuelled this growth, by accelerating industry trends towards online shopping and increasing the importance of well-located distribution hubs and sophisticated supply chain solutions.These trends are reflected in our independent revaluation process, that has resulted in average capitalisation rate compression of 50 basis points to 3.6%, across the leased assets within the Property Trust.

Building Products Australia earnings before interest and taxes (EBIT) was also up 66% to $27 million in the first half.

Total revenue for Brickworks came in at $535 million, a 24% increase from the same period last year. According to Partridge, the company is now on track to hit $1 billion in annual revenue for the first time.

But there could be challenges. As Partridge said:

Of course, the outbreak of war in Ukraine has created increased uncertainty that has the potential to significantly impact all of our businesses in a variety of ways. These impacts may include the price and availability of energy, upward pressure on inflation and interest rates and a decline in consumer confidence. Further strain on international supply chains is already evident, with shipping rates increasing back to levels not seen since the worst of the pandemic.

What happens next?

Brickworks has declared a fully franked interim dividend of 22 cents per share, which will be paid on 3 May 2022.

Brickworks is also planning to launch a new operational property trust with their partner Goodman.

It’s been a tough start to the year for stock markets. But while there’s been plenty of uncertainty, as Greg Canavan says in his new report ‘How to Find Bargain-Priced ASX Superstars after a Big Sell-Off, this isn’t a time to be scared.

To find out more and access this free report, click here.

Best,

Selva Freigedo,
For The Daily Reckoning Australia