Brickworks Lays Solid Performance Ahead of Pandemic Recovery

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Brickworks Lays Solid Performance Ahead of Pandemic Recovery

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  • FY21 Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) of $453 million, up 61 per cent
  • Property business segment up 95 per cent with revenue of $252.6 million for FY21
  • Investments segment up 91 per cent with $96.9 million in revenue for FY21

With an 80-year strong history that attests to its fundamental role within Australia’s brick manufacturing industry, Brickworks Limited continues to pave its success through a strategically diverse portfolio of investments. Despite facing impacts to its building products business segment throughout the pandemic, the company emerged with record results for FY21 — signalling its readiness to secure opportunity ahead of global pandemic recovery.

Brickworks is organised through four distinct business segments, with building products businesses in Australia, North America, as well as operations handling property, and other financial investments. The company reported its FY21 results today, published through its annual report to investors. Notably, Brickworks presents a record total EBITDA of $453 million, up 61 per cent from the previous year. This being an achievement built off the fact that its business segments saw a decreased overall revenue by 6 per cent, at $890.3 million for FY21.

A breakdown of its total revenue by business segment revealed 15 per cent lower performance within its North American Building Products division. However, a stark contrast is noted with its Property segment presenting a monumental 95 per cent growth, contributing $252.6 million in revenue for the year. Brickworks’ Chairman Robert Millner attributes the positive net result of Brickworks’ property assets, mentioning the accelerated demand for prime industrial land adjacent to transport hubs, which results from the trend towards online shopping. The company’s fortuitous result from its property segment is hardly the only reason for its resilience against the pandemic.

Doubling Down on Investments and Acquisition in North America

Brickworks presents equally strong performance with its investments, which tracked 91 per cent growth and brought $96.9 million in revenue for FY21. Despite persisting uncertainty in global markets, its Australian Building Products segment generated 36 per cent growth, bringing its share of $44.3 million in revenue to the Group’s overall performance.

Group Managing Director Lindsay Partridge AM notes how Brickworks’ 39 per cent stake in Washington H. Soul & Pattinson (WHSP, ASX:SOL) continues to bring reliable earnings to the company for over 50 years. The sentiment finds strong support, especially from a September update of WHSP’s regular net profit after tax for FY21. While the company’s Managing Director recognises the continued investment in WHSP as providing Brickworks with a shelter during cyclical downturns, he expresses positive outlook on its merger with the Milton Corporation, to yield post-merger assets amounting in over $9 billion.

Keeping a similarly positive long-term view on growth within its North America Building Products division, Brickworks has pressed on with developments to its operations there. Examples of these efforts include production upgrades to its Hanley and Sergeant Bluff plants, as well as the acquisition of the Illinois Brick Company in August.

Despite capital expenditure for FY21 amounting to $117 million, the group generated a total cash flow of $140 million, up 89 per cent from the prior year. Paying sufficient caution to the possibility of lingering pandemic market effects, Brickworks’ strong operational and financial standing places it in able stead to weather unanticipated challenges to come as the world moves to recover from COVID-19. The company is trading 28.5 per cent higher over the last year, with potential to gain for the near-term.

Louis Mosmann

Louis Mosmann is a Private Wealth Client and Research Assistant at KOSEC- Kodari Securities. Louis covers macroeconomic events, global markets and ASX300 company announcements, allowing clients to make more informed investment decisions. Email Louis at l.mosmann@kosec.com.au.

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