The Brickworks Limited (ASX: BKW) share price will be in the spotlight today after an update about its business performance.
What did Brickworks reveal?
The building products business announced a large revaluation profit within its joint venture industrial property trust. Brickworks’ share of this is expected to be around $100 million.
This will contribute to record property underlying EBIT (EBIT explained) of between $240 million to $260 million for FY21, up from $129 million in the prior year.
The building products businesses in Australia and North America are both expected to achieve higher EBIT in FY21 in local currency terms.
However, with two more months of trading activity to come, it is too early to the business to accurately forecast how much EBIT will grow. Operations in these divisions remain are still exposed to unpredictable COVID-19 related impacts, ranging from a re-opening in the US, to the latest lockdown in Melbourne.
It wasn’t able to provide net profit after tax (NPAT) guidance because of the uncertainty with its building product earnings and the unknown of the investment earnings in the second half of FY21.
Management comments
Brickworks Managing Director Mr Lindsay Partridge said: “Since the end of the first half, there has been a number of significant industrial property transactions in western Sydney. The pricing of these transactions has reinforced the strong investor appetite for prime industrial property assets.
“We have seen strong demand and sustained growth in the value of our property trust over a number of years. The COVID-19 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.”
Further growth to come?
Brickworks is expecting more property completions in the next couple of years. The practical completion of the Amazon facility at Oakdale West is expected to occur in the first half of FY22. The even larger Coles Group Ltd (ASX: COL) is now under construction, with completion of this facility scheduled early in FY23.
The completion of these facilities is expected to lead to an increase in value and rental profit. The Brickworks share price looks attractive to me for the long-term at the current value.
I think Brickworks is one of the leading ASX dividend shares out there, particularly with the ongoing projects.
