Brickworks share price edges higher on $746 million profit result

The Brickworks Limited (ASX: BKW) share price is forging into the green in morning trade amid the company reporting its full-year results for FY22.

Shares of Australia’s largest building products manufacturer currently trade for $21.76 apiece, up 0.32%, after dropping as low as $21.05 shortly after market open.

Let’s go over the report’s highlights.

What did Brickworks report?

• Total revenue up 28% year over year (yoy) to $1.09 billion
• Underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) up 133% yoy to $1.05 billion
• Underlying net profit after tax (NPAT) up 159% yoy to $746 million
• Final fully franked dividend of 41 cents per share

Brickwork’s standout operating segment for the year was property. Namely, its industrial property portfolio around Sydney and Brisbane. Total earnings for the segment increased 155% yoy to $644 million.

The company stated its portfolio benefited from a “strong uplift in valuation in response to the burgeoning demand for prime logistics and warehousing space. In addition, strong development activity contributed to the Property result.”

Meanwhile, Brickwork’s earnings for building products also grew in Australia and the United States. This was said to be helped by the company’s investment in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

Revenue for building products in Australia grew 7% to $694 million, and EBITDA grew 110% to $205 million.

Over the same period, revenue for North American building products grew considerably more, recording a 97% gain to $399 million while EBITDA grew 84% to $48 million.

Brickwork’s fully franked dividend of 41 cents per share has a record date of 2 November and an expiry date of 1 November. The expected payment date is 23 November.

What else happened in FY22?

The company’s joint venture trust value surged in FY22 to $1.54 billion, up from $631 million in FY21.

As well, Brickworks launched an additional joint venture property trust with Goodman Group (ASX: GMG) comprising 15 manufacturing facilities. The total value of the trust stands at $416 million.

Brickworks also notes that despite its considerable investments over the years, its leverage remains low, with a net debt-to-equity ratio of 15%.

What did management say?

Brickworks managing director Lindsay Partridge commented on the growth of its Industrial JV trust:

A highlight for the year was the completion of the state-of-the-art Amazon distribution centre, the first facility at Oakdale West, in Sydney. This followed many years of planning and investment in site preparation and infrastructure at this Estate. With further facilities now close to completion, Oakdale West is well on the way to becoming one of the most prestigious industrial property precincts in the southern hemisphere. Other Estates at Oakdale South (Sydney) and Rochedale (Brisbane) have now been fully built out, following the completion of final developments at these precincts during the second half.

What’s next?

Partridge described the future as having “an increasingly uncertain outlook”. Some factors at play were stated to be rising interest rates and threats of a recession.

He also gave the following commentary on what the future could look like:

There is a significant development pipeline within the Industrial JV Trust, and the continued development of Oakdale West will drive asset growth over the coming years. The anticipated sale of the balance of Oakdale East into the Trust in FY23 will support continued growth over the medium term. We continue to explore property opportunities in North America, and have recently executed a non-binding Heads of Agreement with Goodman, to investigate the development of the Mid-Atlantic site in Pennsylvania. From FY23, Property will also include earnings generated by the Brickworks Manufacturing Trust.

Brickworks share price snapshot

The Brickworks share price is down almost 12% year to date.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is around 11% lower over the same period.

The company’s current market capitalisation is $3.28 billion.

The post Brickworks share price edges higher on $746 million profit result appeared first on The Motley Fool Australia.

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Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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