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Highlights
- Brickworks Limited shares surged 8% following the release of its FY24 results.
- The company experienced declines in both underlying EBITDA and net profit, but improved margins were noted.
- Brickworks' property division showed resilience, with rental income increasing despite challenges.
Brickworks Limited (ASX:BKW) has witnessed an 8% increase in its share price following the release of its FY24 financial results. This Australian company is renowned for producing a diverse range of building products, including bricks, paving, masonry, and roofing materials. In addition, Brickworks holds shares in Washington H. Soul Pattinson and Co. Ltd (ASX:SOL) and boasts a substantial portfolio of property assets, including a significant industrial property portfolio.
FY24 Financial Highlights
For the fiscal year ending July 31, 2024, Brickworks reported several noteworthy financial metrics:
- Underlying EBITDA fell sharply by 80% to $157 million.
- Underlying net profit after tax (NPAT) declined by 88% to $61 million.
- Statutory NPAT decreased significantly by 130%, reaching $119 million.
- A final dividend of $0.43 per share was announced, reflecting a 2% increase, while the full-year dividend rose by 3.1% to $0.67 per share.
Despite the overall decline in financial performance, the Australian building products segment achieved a 2% increase in underlying EBITDA, amounting to $102 million. Additionally, the North American building products division reported a 9% increase in underlying EBITDA, totaling $43 million.
Operational Adjustments
In response to lower building activity, Brickworks has scaled back production to manage inventory levels, resulting in improved profit margins across various sectors. The completion of the new brick plant at Horsley Park during the second half of the year marked a significant operational milestone, although staffing reductions were implemented in both Australian and U.S. operations.
The property division also showed resilience, with rental income climbing 9% to $163 million, supported by contracted increases and new developments. However, net trust income experienced a slight decline of 1% to $98 million due to rising borrowing costs. The company reported a $75 million development profit, although it also faced a $215 million accounting loss related to property revaluations.
Future Outlook
Looking ahead, Brickworks is poised for growth, especially if demand for building products rebounds. The company highlighted the potential for rental growth within its property trust. Current passing rent stands at $180 million, while market rent for these properties is estimated at $251 million, indicating a potential uplift of nearly 40%. Furthermore, ongoing developments could contribute an additional $90 million in rent, suggesting a possible overall rental growth of around 90% over the long term.
With its strategic investments, including a significant stake in Washington H. Soul Pattinson, Brickworks Limited presents a promising outlook for future performance and value creation.
