Australia's Biggest Brick Maker, Brickworks And Its Acquisitions Across The Globe

Clay Brick Manufacturing Industry

An essential building material, brick is usually utilised to build walls, pavements and other construction activities. Bricks are produced in different types, classes and materials which varies across the regions. The Clay Brick Manufacturing Industry has shown unstable revenue over the past five years period in Australia due to fluctuations in dwelling commencements, which strongly influenced the industry's performance. Strong dwelling commencement numbers fuelled industry growth at the beginning of the period. However, a downturn in new dwelling commencements over the past four years has driven the decline in the industry’s revenue over the same period.

Building activity Bricks has been predicted to continue being swapped with other types of construction materials across the upcoming five years period. The major companies engaged into Clay Brick Manufacturing business in Australia are Brickworks Limited, CSR Limited, and Boral Limited.

Let us now discuss Brickworks Limited and its updates:

Brickworks Limited (ASX: BKW)

Brickworks Limited headquartered in NSW, Australia, is engaged in distribution and manufacturing of clay and concrete products. It has investment interests in the entities, as well as property development. The company has a market capitalisation of approximately $2.78 billion (as on 7 November 2019). Brickworks has more than 1,400 employees throughout Australia and New Zealand region. The company’s product includes retaining wall systems, precast concrete panels etc.

Change in BKW’s interests in CLV

On 7 November 2019, BKW via a release conveyed to the market on the change of its interests in Clover Corporation Limited (ASX: CLV). On 29 October 2019, BKW (substantial holder) reduced its voting power from previously held 23.10 percent to currently held 20.85 percent.

Brickworks Acquires assets of Redland Brick

On 6 November 2019, the company announced that it had signed a binding agreement to acquire assets of Redland Brick Inc. for up to US$ 48 million. The key highlights of the binding agreement are as follows:

• The acquisition includes four manufacturing sites including one each in Pennsylvania and Virginia and two in Maryland with sales of circa 80 million bricks per year.
• The acquisition provides a faster and more profitable route to attain a modern network of extremely utilised manufacturing plants versus building new plant.
• The acquisition is anticipated to provide three per cent of Earnings Per Share growth within three years period, after the realisation of identified cost strategies.
• The transaction is anticipated to conclude in February 2020.

Brickworks Managing Director, Mr Lindsay Partridge commented:

After the acquisition of Redland Brick assets’ conclusion in February next year, Building North America would be business of considerable scale, including;

• Market share leadership throughout the Northeast, Midwest and Mid-Atlantic regions.
• Well Recognised portfolio of premium brands, with above 1,000 employees.
• 12 operating brick plants and one manufactured stone plant with circa 400 million brick sales per year.
• An extensive reseller network and company-operated retail outlets with circa $290 million in sales revenue per year.

Change of BKW’s interests in ACQ

On 4 November 2019, the company announced that it has changed its interests in Acorn Capital Investment Fund Limited (ASX:ACQ) from the earlier held 7.66 percent voting power to currently held 6.65 percent effective 30 October 2019.

Appointment of Non-Executive Director

On 29 October 2019, BKW notified on the hiring of Robyn Stubbs, (independent non-executive) Director to the BKW’s Board, effective 1 January next year.

Ms. Stubbs is also at present Director (non-executive) of ASX listed Aventus Group (ASX: AVN). She holds a Bachelor of Business from the University of Technology. The selection of Ms. Stubbs to the Board will boost the number of directors to 8 in order to enable an easy transition until the time, Brendan Crotty steps down in AGM (to be held next year).

Notice of Annual General Meeting

On 21 October 2019, the company notified the market on the 85^th Annual General Meeting to be held on 26 November 2019. The AGM would consider the below-mentioned components of the business;

• Receive and consider the financial and other reports.
• Adopt the remuneration report for the year ended 31 July 2019.
• Grant of Performance Rights to the Managing Director under the new Executive Rights Plan for FY 2019.
• Re-Election of Mr M. Millner (director).
• Re-Election of The Hon R. Webster (director).
• Re-Election of Mr M. Bundey (director) and
• Conditional Resolution.

Approval to develop 89 Hectares Industrial land

On 20 September 2019, the company released an announcement that its Joint Venture Property Trust has obtained an approval from New South Wales Department of Planning, Industry and Environment to start development of Oakdale West Industrial Estate in Kemps Creek (Sydney).

The approval secures the future development of 89 hectares of land inducing 116,000m² for Precinct 1 building works, Stage 1 infrastructure work and lead-in services.

The property trust has expanded significantly over the last 10 years and has more than $1.7 billion assets throughout western Sydney and Brisbane.

Total Revenue soared by 17 per cent in FY 2019

On 19 September 2019, the company announced the financial results for FY 2019 period ending 31 July 2019, a few highlights from the results are as follows:

• The company’s total revenue has soared by 17 per cent to $919 million compared to the previous corresponding period (pcp).
• Underlying EBITDA of the company rose by 12 per cent to $346 million compared to the pcp.
• Net Profit After Tax (underlying) from continuing operations increased by 4 per cent to $234 million from pcp.
• Underlying earnings per share was up by 4 per cent to 156 cents.
• The board has announced a fully franked final dividend/distribution of 38

Outlook

• Earnings, Dividends and market value of WHSP are anticipated to increase over the long term though the contribution to the company would be affected by the reduced shareholding.
• The company has a solid outlook for Property Trust earnings and valuation due to significant development pipeline and expects the sale of 10 hectares at Oakdale East into the Trust.
• In the second half, the company anticipates the market to strengthen, based on the current level of home builder sales. The transition to wholesale gas supply on 1 January next year would give some relief from soaring gas prices.

Stock Performance

The stock of BKW last traded at $18.800 on 07 November 2019, rising by 1.239 per cent from its previous close. The company has approximately 149.9 million outstanding shares and a market cap of $2.78 billion. The stock’s 52 weeks low and high was recorded at $14.750 and $19.330, respectively. The stock has generated a positive return of 14.14 per cent in the last six months and a positive return of 12.21 per cent on the year to date basis.

Disclaimer

This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.