Linked companies, Washington H. Soul Pattinson and Brickworks are major shareholders in each other, and share board members. And they also share a rather parsimonious approach to rewarding shareholders.
In other words both companies, as they showed yesterday with their interim results, are tightwads
Thanks to the dwelling investment boom – especially apartments – Brickworks saw earnings hit an all time high in the six months to January 31, with expectations of more to come.
The company told the ASX and a briefing that it has a “full order book” in east coast markets where builders have a long backlog of work, with little change expected through to the middle of the year at least.
It reported a net profit of $104.1 million for the six months to January, up 48% from $76.9 million a year earlier on revenue of $428.9 million up from $360 million.
And yet all it could manage so far as the interim dividend was concerned was a one cent lift to of 17 cents a share.
“This record result reflects the strong contribution from each group within Brickworks — building products, land and development and investments — again demonstrating the benefit of the company’s diversification strategy which has consistently grown net asset value over the long term,” the company said in a release yesterday.
“Building products earnings for the 2017 financial year will be underpinned by a full order book and a long pipeline of work at higher margins in our major east coast markets,” Brickworks said yesterday
"Land and development earnings are expected to be higher for full year 2017, following the strong first half. Investments earnings are expected to deliver steadily increasing earnings and dividends over the long term."
But there were a couple of bearish points – the first was “trade shortages and a lack of titled land” slowing activity in the building industry, with the housing industry operating at what it termed “natural capacity".
And despite the boom in the east coast, softness in Western Australia remains a drag, although it appears to be through the worst of its downturn.
“In Western Australia, the sharp downturn in building activity has resulted in a significant decline in sales, however conditions appear to have stabilised over the past few months and building activity is not expected to decline further,”Brickworks said in yesterday’s release
"Nevertheless … it will be necessary to reduce brick production by mothballing some manufacturing capacity during the second half.
“The impact of reduced production will be offset by the extensive restructuring initiatives undertaken during the first half that will result in lower unit production costs at the Cardup plant."
Brickworks shares rose a cent to $13.77 yesterday.
