• Record Property earnings expected in FY2021
• Building Products EBIT expected to be higher in both Australia and North America1
in FY2021, with sales gathering momentum
Brickworks (ASX: BKW) today announced a significant revaluation profit within its Joint Venture Industrial Property
Trust (“Property Trust”), with Brickworks’ share expected to be around $100 million. This will contribute to record
Property underlying earnings before interest and tax (“EBIT”) of $240-260 million for FY2021, up from $129
million in the prior year.
Building Products Australia and North America are both expected to record higher EBIT in FY2021 in local
currency terms. However, with two more months of trading activity to come, it is too early to accurately forecast
the extent of the EBIT uplift. Operations in these divisions remain exposed to unpredictable COVID-19 related
impacts, currently ranging from a rapid re-opening of the economy across the United States, to newly imposed
lockdowns in Melbourne.
Due to the uncertainty within Building Products and a lack of visibility of Investment earnings in the second half,
which are driven by the Company’s 39.4% shareholding in Washington H. Soul Pattinson, no guidance can be
provided in relation to Brickworks’ net profit after tax (“NPAT”).
More detail will be provided at Brickworks’ full year results announcement, on Thursday 23 September.
Record Property earnings expected in FY2021
Brickworks expects to report record Property earnings in the current financial year, with Property EBIT in the range
$240-260 million, driven by the continued increase in the value of its Property Trust.
Brickworks Managing Director, Mr. Lindsay Partridge said: “Since the end of the first half, there has been a number
of significant industrial property transactions in western Sydney. The pricing of these transactions has reinforced
the strong investor appetite for prime industrial property assets.”
“Given the number of sales and the steep movement in transaction pricing, an independent valuation of our
Property Trust assets has been completed, and this process has resulted in further compression of capitalisation
rates across our portfolio. As such, a revaluation profit of around $100 million will be recorded in the second half,
representing Brickworks’ 50% share of the valuation gain.”
“In addition, Property earnings are expected to be boosted further by the completion of developments at Oakdale
East, currently forecast to occur in July.”
“We have seen strong demand and sustained growth in the value of our Property Trust over a number of years.
The COVID-19 pandemic has only fuelled this growth, by accelerating industry trends towards online shopping
and increasing the importance of well-located distribution hubs and sophisticated supply chain solutions.”
“Practical completion of the Amazon facility at Oakdale West is expected to occur in the first half of financial year
2022. The even larger Coles distribution warehouse is now under construction, with completion of this facility
scheduled early in financial year 2023.”
1 Comparative North American EBIT measured in local currency ($US)
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Building Products sales gathering momentum in Australia and North America
The Company also reported that sales momentum is gathering in its Building Products businesses in both
Australia and North America.
Mr. Partridge said: “In Australia, the significant uptick in housing approvals is now translating to increased building
activity, with our sales particularly strong in Queensland and Western Australia over recent months. That said,
the availability of some materials, such as timber for house trusses, is an issue in some areas, with the resultant
delays likely to flatten and extend the duration of the existing pipeline of work.”
“We expect EBIT from Building Products Australia to finish FY21 higher than last year, noting that EBIT in the
prior year included a significant write-back of costs to take into account the impact of the COVID-19 pandemic.”
Operations in North America have been harder hit by the pandemic, particularly in the first half of FY21. However,
with the vaccine program in the United States well advanced, building activity in the United States is now ramping
Mr. Partridge said: “We have seen a strong rebound in sales volume to our housing customers in May, with this
segment currently making up around 60% of total sales. Pleasingly, we are now meeting the sales targets set at
the time of the Redland Brick acquisition, prior to the pandemic.”
“A strengthening of commercial sales is anticipated as delayed and deferred projects re-commence over the
“Based on the current momentum and including earnings from the sale of our York facility, we expect US dollar
EBIT from Building Products North America to finish the year higher than FY20, despite the lower first half”.
courtesy of Bell Direct
i hold BKW ( and SOL )