The Brickworks Ltd (ASX: BKW) share price is under the spotlight after the business reported its HY25 result.
Brickworks has an Australian building products division, a US building products division, various property holdings and an investments division.
HY25 result
Here are some of the highlights from the first six months of the FY25 result:
- Underlying EBITDA rose 472% to $148 million
- Underlying net profit after tax (NPAT) rose 308% to $76 million
- Operating cashflow grew 11% to $59 million
- Statutory net profit rose 141% to $21 million
- Interim dividend per share increased by 4.2% to $0.25
The company recently gave an update that its US building product earnings were particularly challenged, while the Australian division was also challenged in the current environment, though Australian earnings were flat.
Australian building product EBITDA declined 4% to $50 million and the US building product EBITDA sank 115% to a loss of $3 million.
Brickworks’ property division reported rental income growth of 8% to $88 million, but borrowing and other costs jumped 20% to $37 million, leading to net trust income growth of 1% to $51 million. Property trust revaluations was $0, compared to a decline of $233 million last year – this helped the property EBITDA climb 121% to $38 million.
Oakdale West property leases commenced during the HY25 period, partially offset by the sale of the M7 assets (sold in January 2024).
Brickworks said its 50% share of net property trust assets declined 1% to $1.995 billion following a 3% increase of borrowings to $1.42 billion.
From the existing trust assets, Brickworks said there is a “considerable opportunity to increase rental income”. It currently makes $198 million of passing rent and the market rent is estimated at $260 million. Its developments of Oakdale West, Oakdale East 2 and Rochedale are expected to add another $82 million of market rent.
In total, the potential market rent comes to $341 million, 72% higher than the current rental generation. This is expected to take several years to be progressively realised.
In the investment division, EBITDA fell 4% to $73 million, dividends received grew 8% to $52 million and the market value declined 4% to $3.26 billion.
Outlook for the Brickworks share price
Brickworks is expecting the property division to continue achieving strong growth in net rental income from new developments and leases of existing assets. It’s still experiencing strong lease enquiry for large-sized facilities.
Development profits are expected in the second half, as the 57,200m2 Amazon facility nears completion.
Short-term demand in Australia and the US market is expected to remain soft. But conditions are expected to improve from 2026 and further strengthen from 2027.
Brickworks believes it’s well-placed to deliver strong returns when market conditions improve after re-structuring, portfolio rationalisation and significant manufacturing investments.
