Brickworks Ltd (BKW) has lifted its interim dividend despite a slight fall in half-year net profit because it expects to keep reaping the rewards of the current upturn in housing activity, which “shows no sign of easing”.
The company said yesterday it will pay a fully-franked interim dividend of 15c a share, up 7.1% on the previous interim dividend.
Directors told the ASX in yesterday’s interim profit release that the continuing increase in sales volumes and cost reduction initiatives would put the group in a strong position to deliver “significantly improved earnings in the second half of the final year” compared to the previous corresponding period.
In other words, Brickworks said it is enjoying the current boom for its bricks and other masonry products, especially along the East Coast, and expected to go on riding the rise in demand well into next year.
So on the basis of those upbeat comments, the 25% fall in interim net profit to $42.2 million for the six months to January 31 was a blip, hit by nearly $17 million in impairment charges relating to its Austral Precast and Auswest Timbers subsidiaries.
Underlying profit was up 18% and was a truer reflection of the actual trading conditions for the company in the half year.
Revenue in the same period rose 7.4% to $349.6 million.
BKW 1Y – Brickworks sees ‘no sign of easing’ in current housing run
The company’s building products business saw earnings before interest, tax and significant items jump 36% to $26.1 million.
"Earnings across most divisions improved, through a combination of continued sales growth, price increases and the implementation of a range of business improvement initiatives," CEO Lindsay Patridge told an analysts’ briefing.
Land and Development earnings before interest and tax (EBIT) was $38.7 million, up 7%, "driven primarily by a strong revaluation profit in the Joint Venture Industrial Property Trust” according to the CEO.
Investment EBIT, including the contribution from Washington H Soul Pattinson (owner of 42% of the company) was up 27% to $30.1 million.
Total EBIT was up 21% to $90.0 million for the half.
