The largest brick manufacturer company of Australia Brickworks Limited (ASX: BKW) is happy to announce its binding agreement of America’s 4th largest brickmaker, Glen-Grey for US$110 million. Glen-Grey forms is a 100% subsidiary of Ibstock PLC which is a UK based company.
Glen-Grey holds a strong position in the Midwest, Northeast and Mid-Atlantic states. It has the potential to sell around 230 million bricks per year. It has around ten manufacturing plants. It controls around 95% of raw materials as it owns 29 quarries at the manufacturing sites. It offers a huge variety of bricks whom they sell to builders and resellers through its distribution outlets.
By entering into the transaction with Glen-Gery, Brickworks will have a larger exposure to the attractive market that will help in identifying the key drivers to these markets. Apart from that, this agreement will add value to the company through investment and also influence the operational expertise. The company also sees a long-term growth opportunity with Glen-Gery.
It highlights that this transaction is expected to complete within a couple of days.
Mr. Lindsay Partridge who is the managing director of the company considers this acquisition as a significant milestone in the history of the company. This transaction will act as a gateway to the US market as Glen-Gery holds a strong position in the US market.
The company is very determined as it remains committed to the Australian market even though they were facing multiple challenges by the local manufacturers. The company holds a strong position in Australia by making a consistent investment to maintain its manufacturing plant and operations throughout Australia. Now as per the agreement, the company expects Glen-Gery to get into its business in Australia with Glen-Gery ’s existing management team.
Since the inception, the company has given a consistently positive performance. The one year, five years and ten years performance of the company is 9.99%, 13.26%, and 75.92% respectively.
For the year ended 31 July 2018, the net profit after tax was $175.442 million. The underlying EPS is equivalent to 150 cents which got increased by 14%. The company holds a strong financial position as the net asset of the company is $2,071.078 million which indicates that the company can meet its long-term obligations. Also, the current asset of the company is $368.473 million and current liabilities of the company is $177.655 million which indicates that the company can meet its short-term obligations as well as the net working capital. The total shareholder's equity is worth $2,071.078 million. The net cash from the operating activities is $170.948 million. The major cash outflow in this category is due to payment made to the suppliers and the employees. The net cash used in investing activities is $103.730 million. Under this category, the company is purchased plant, property, and equipment. Another source of cash outflow under this category was that the company had made investments for the joint ventures. The net cash used in financing activities was $65.692 million. The cash at the end of the year was $21.167 million.
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