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The share price of Brickworks Limited (ASX: BKW) is experiencing a downturn on Thursday's trading session. As of the morning session, the building products company's shares have declined by 2.81% to AU$28.38 apiece.
This decline follows the release of Brickworks' half-year results before the market opened, which revealed several key metrics:
Key financial highlights
- Total revenue saw a decrease of 6% to AU$547 million.
- The company reported an underlying EBITDA loss of AU$40 million.
- Underlying net loss amounted to AU $37 million.
- Despite the challenging financial performance, Brickworks announced a 4% increase in its fully franked interim dividend to 24 cents per share.
What transpired during the first half of the fiscal year?
For the six months ending 31 January, Brickworks witnessed a 6% decline in revenue, primarily driven by an 11% decrease in Australian Building Products revenue, amounting to AU$323 million. Building Products North America revenue remained relatively unchanged at AU$224 million.
The company's earnings were significantly impacted by its Property Trust segment, which reported an EBITDA loss of AU$178 million. This loss was attributed to a non-cash devaluation of AU$233 million on its assets following an independent valuation process. The increase in capitalisation rates across the portfolio to 5.1%, up from 4.1% in July 2023, contributed to this loss. It's noteworthy that this devaluation offset the revaluation gains of $615 million delivered in the previous five years as capitalisation rates compressed.
Despite challenges, there was a 5% growth in EBITDA from the Building Products Australia business to AUA$52 million and a substantial 43% increase in Building Products North America EBITDA toU $21 million. However, these positive performances were outweighed by the losses in the Property Trust segment, resulting in an underlying EBITDA loss of AU$40 million and a net loss of AU$37 million for the half.
In a surprising move, despite the financial setbacks, Brickworks' board decided to increase its interim dividend for the 10th consecutive year to 24 cents per share, payable to eligible shareholders on 1 May.
Looking ahead, Brickworks' managing director, Lindsay Partridge, acknowledged the short-term challenges but expressed optimism about the company's long-term prospects. He highlighted the strong outlook for each of the company's businesses, citing structural trends favoring demand for prime industrial facilities in the Property segment and anticipating a building boom in Australia and North America for the Building Products business.
Partridge also expressed confidence in the company's investment in Washington H Soul Pattinson and Company Ltd (ASX:SOL), expecting stable earnings and dividends over the long term. He emphasized the company's commitment to maximizing cash generation in the short term and highlighted Brickworks' diversified portfolio of high-quality assets as a key strength to navigate future challenges and deliver shareholder value.
