Brickworks (ASX:BKW) gains on Goodman deal, record earnings

July 22, 2022 12:51 PM AEST | By Sonal Goyal

Brickworks (ASX:BKW) gains on Goodman deal, record earnings — Image source: © Vlado85 | Megapixl.com

Details of the Brickworks Manufacturing Trust

Brickworks informed that it has 50.1% interest in the formed trust, and Goodman has the rest 49.9% interest. Initially, 15 operating sites would be housed, compromising 496 hectares in land area.

Reportedly, Brickworks’ operating businesses will tenant all the sites of the new trust with a long-duration lease (the option to extend the lease will be available). According to the ASX announcement, the AU$17.75 million is the initial net rent.

Lindsay Partridge, managing director, Brickworks, said in a statement that lease back and the partial sale of these properties would generate significant cash proceeds and would assist the company in delivering shareholders’ value.

Property earnings in FY22 to be driven by Industrial JV Trust

Image source: © Tund | Megapixl.com

The building product company expects to deliver record property earnings in FY22 (financial year 2022). The estimated property EBIT is approximately AU$620 million. In FY21, the company reported a property EBIT of AU$253 million.

Patridge said that the company made significant progress across major developments during the second half of FY22.

Brickworks said that the development profits to be generated during the 2HFY22 are estimated to grow the company’s 50% share of net tangible assets within the trust to approximately AU$1.5 million by the end of FY22. This can be compared to AU$1.3 billion as of January 2022.

FY22 EBIT to be driven by building products operations in North America and Australia

The company expects EBIT from the building products operations in North America and Australia to be higher in the FY22 in comparison to the previous year.

In Australia, the company expects EBIT to be almost 20% higher than the prior year. This expectation is supported by the fact that the company is witnessing high demand because of the immense ‘backlog of construction activities in the pipeline.’

Talking about North America, Brickworks expects to double the EBIT in FY22 compared to the previous year. It includes sales of the various quarry sites during the second half.

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