Brickworks Limited (ASX: BKW) shares jump on 1H2023 earnings

Highlights:

• Brickworks Limited (ASX: BKW) today released its 1H2023 results ended 31 January 2023.
• In 1H2023, the company's revenue from continuing operations grew 13.46% to AU$584 million.
• The company announced a 100% franked interim dividend of 23 cps, up 5% from 22 cps in pcp.

Building material manufacturer Brickworks Limited (ASX: BKW) released its 1H2023 results ended 31 January 2023 on Thursday, 23 March 2023. Its shares reacted positively to the update and were trading in the green. At around 2:40 pm AEDT, the stock was up by 4.47% at AU$24.07.

Here are the key takeaways from BKW’s interim earnings.

During 1H2023, Brickworks’ revenue from continuing operations grew 13.46% to AU$584 million from AU$515 million in pcp. Underlying NPAT from continuing operations rose 23.98% to AU$410 million from AU$331 million in pcp.

However, its statutory net profit, including significant items, fell 38% to AU$354 million. In the reported period, basic earnings per share (EPS) was down 38.56% to 233 cents against 379.3 cents in pcp.

For 1H2023, the company announced a 100% franked dividend of 23 cps, compared to 22 cps in pcp. The stock will turn ex-dividend on 6 April and has a record date of 11 April. The dividend amount will be paid on 2 May 2023.

Further, in October last year, BKW executed a supply deal with UK’s market-leading building products company Brickability PLC, to sell bricks in the UK market. The supply deal is for a decade and comprises a minimum purchase quantity of ten million bricks each year.

Brickworks 1H2023 segment performance

Building Products Australia’s revenue increased 11% to AU$364, but EBITDA slipped by 6% to AU$50 million. The decline in earnings was caused by a decrease in Bristile Roofing and Austral Bricks Western Australia. However, other business units registered positive earnings growth.

Building Products North America recorded revenue of AU$220 million, up 18% YoY. The rise in revenue was propelled by robust growth in sales to the multi-residential segments and across the vertically integrated retail segment. EBITDA jumped 16% to AU$14 million in spite of the ongoing effect of cost inflation and the dearth of labour.

BKW’s property division in 1H2023 registered EBIT of AU$453 million, which was 26% higher over pcp. In the reported period, the company sold Oakdale East Stage 2 into the Industrial JV Trust for consideration of AU$301 million.

Brickworks FY23 outlook

On the Property Trusts front, the addition of Oakdale Stage 2 into the Industrial JV Trust in 1H2023 provided a substantial new parcel of land to accommodate the robust consumer demand for well-located regions. It is anticipated the land will be 100% serviced and ready for construction work to begin by the initial CY24.

Building Products Australia’s focus in the next twelve months will be finalising and commissioning the new brick plant at Horsley Park. Also, the review of Austral Bricks Western Australia is anticipated to conclude in 2H2023. It will be decided whether to maintain brick operations in the state.