The Brickworks Limited (ASX: BKW) share price is up after reporting its FY23 half-year result, revealing strong profits and dividend growth.
Brickworks is the largest brickmaker in Australia, as well as in some areas of the US. It also has other assets.
HY23 result
Here are some of the highlights from the first six months of FY23:
- Total revenue increased 13% to $584 million
- Underlying EBITDA (EBITDA explained) grew by 25% to $607 million
- EBITDA from investments increased 37% to $100 million
- Underlying net profit after tax (NPAT) grew by 24% to $410 million
- Statutory net profit down 38% to $354 million
- Half-year dividend down 5% to $0.23 per share
Brickworks said that the statutory profit was boosted last year by a ‘significant’ one-off profit relating to the deemed disposal of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares after its merger with Milton.
The company noted that the property division was a “standout”, with the highlight being the sale of Oakdale East stage 2 into the industrial joint venture trust with Goodman Group (ASX: GMG).
Property earnings were also supported by the completion of a number of new developments at the Oakdale West Estate in Western Sydney.
A “strong uplift” in market rent for prime industrial property helped drive a revaluation gain, despite the impact of capitalisation rates (property rental yields). There was a revaluation profit of $113 million.
Earnings from the building products division was “relatively steady”, with Australian building product EBITDA falling 6% to $50 million and North American building products EBITDA rising 16% to $14 million.
The WHSP result was covered here by Rask Media.
Outlook for the Brickworks share price
Brickworks said that the development pipeline within the property trusts is ‘strong’ and it’s expecting a “significant increase in rental income over the coming years as new developments are completed and rent reviews are undertaken”.
While the second half could see resilient sales for building products, the slowdown of building activity “will arrive before the end of the calendar year” and could lead to lower demand once the existing pipeline work is built out. The slowdown could be more significant for the Australian business.
The company said that manufacturing costs “will benefit from the extensive plant rationalisation and upgrade activities completed over the past few years.”
It’s expecting that WHSP will “continue to deliver a stable and growing stream of earnings and dividends over the long-term”.
Brickworks said that it had a inferred asset back of over $35 per share, including its land at market value, so I think the Brickworks share price is great value today as more properties are completed.
