BRICKWORKS LIMITED For personal use only
24 March 2022
Half Year 2022 Report
REVIEW OF OPERATIONS
Authorised for release by the Board of Brickworks Limited
Investor relations enquiries | Media enquiries |
Lindsay Partridge, Managing Director | Lelde Smits / Julia Maguire, The Capital Network |
Phone: +61 2 9611 4216 | Phone: +61 2 8999 3699 |
Email: IR@brickworks.com.au | Email: info@thecapitalnetwork.com.au |
Brickworks Limited | ASX: BKW | ABN 17 000 028 526
738-780 Wallgrove Road, Horsley Park, NSW 2175 | info@brickworks.com.au | www.brickworks.com.au | Page 1 |
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Brickworks Achieves Record 1st Half Earnings
1H2021 | 1H2022 | |||
$m | $m | Change1 | ||
Revenue | ||||
Building Products Australia | 330 | 348 | 6% | |
Building Products North America | 102 | 187 | 84% | |
Total revenue | 432 | 24% | ||
535 | ||||
Earnings before interest and tax1 (EBIT) | ||||
Building Products Australia | 16 | 27 | 66% | |
Building Products Australia EBITDA | 43 | 54 | 25% | |
Building Products North America | 4 | 1 | (70%) | |
Building Products North America EBITDA | 13 | 12 | (1%) | |
Property | 92 | 358 | 289% | |
Investments | 25 | 73 | 196% | |
Head office and other expenses | (10) | (9) | (2%) | |
Total EBIT | 127 | 450 | 254% | |
Total EBITDA | 163 | 488 | 200% | |
Finance costs | (10) | (9) | (9%) | |
Income tax | (27) | (110) | 298% | |
Underlying NPAT2 - Continuing Operations | 90 | 330 | 269% | |
Significant items and discontinued operations (net of tax) | (18) | 251 | NA | |
Statutory NPAT | 71 | 581 | 720% | |
Per share earnings and dividends | ||||
Underlying earnings per share (cents) | 59 | 218 | 266% | |
Basic earnings per share (cents) | 47 | 383 | 710% | |
Interim ordinary dividend per share (cents) | 21 | 22 | 5% | |
Net tangible assets per share ($) (vs 31 July 2021) | 13.88 | 16.72 | 20% | |
- All percentage changes are based on $ figures to the nearest thousand (not millions as shown in table)
- This is an alternative measure of earnings that excludes significant items, which are separately disclosed in the consolidated financial statements.
Brickworks Limited | ASX: BKW | ABN 17 000 028 526
738-780 Wallgrove Road, Horsley Park, NSW 2175 | info@brickworks.com.au | www.brickworks.com.au | Page 2 |
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Financial
Overview
- Statutory NPAT including significant items, up 720% to $581 million
- Underlying NPAT from continuing operations before significant items, up 269% to $330 million
- Underlying EBIT from continuing operations before significant items, up 254% to $450 million (EBITDA up 200% to $488 million)
- Building Products Australia EBIT up 66% to $27 million (EBITDA $54 million)
- Building Products North America EBIT down 70% to $1 million (EBITDA $12 million)
- Property EBIT up 289% to $358 million. Net Property Trust assets up $349 million, to $1.260 billion
- Investments EBIT up 196% to $73 million. Brickworks' share of WHSP market value down $504 million during period, to $2.576 billion
- Operating cash flow down 17% to $63 million
- Interim dividend of 22 cents fully franked, up 1 cent or 5% (Record date 12 April 2022, payment date 3 May 2022)
Earnings
Brickworks Group (ASX: BKW) posted a Statutory Net Profit After Tax ('NPAT') of $581 million for the half year ended 31 January 2022, up 720% on the previous corresponding period. Underlying NPAT from continuing operations was $330 million, up 269% on the prior period.
On sales revenue of $348 million, Building Products Australia Earnings Before Interest and Tax from continuing operations ('EBIT') was $27 million, up 66% on the previous corresponding period (EBITDA was $54 million). The improved result was primarily due to an uplift in earnings from Austral Bricks, driven by strong underlying demand across all states.
Building Products North America recorded an 84% increase in revenue, to $187 million, driven by the acquisition of IBC3 in August 2021 and increased sales to the southern residential market. However, EBIT was down 70% to $1 million (EBITDA was $12 million), with margins adversely impacted by cost pressures across the supply chain and pandemic related challenges impacting staffing levels and production. In addition, demand from the higher margin commercial and architectural segment remains weak compared to pre-pandemic levels.
3 The acquisition comprised certain assets of Southfield Corporation, including Illinois Brick Company ("IBC").
Brickworks Limited | ASX: BKW | ABN 17 000 028 526
738-780 Wallgrove Road, Horsley Park, NSW 2175 | info@brickworks.com.au | www.brickworks.com.au | Page 3 |
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Property EBIT was a half year record, up 289% to $358 million, driven by another strong performance from the 50/50 joint venture property trust with Goodman Group4 ('Property Trust'). Strong revaluation and development profits were recorded during the period. This resulted in Brickworks' share of the net asset value within the Property Trust increasing by $349 million to $1,260 million. The increasing value of the Property Trust reflects a wider structural change across the economy, as companies modernise their supply chains in response to consumer preferences, such as online shopping.
Investments EBIT was $73 million, up 196%, with Washington H. Soul Pattinson ("WHSP", ASX: SOL) earnings benefitting from an increase in the contribution from New Hope Corporation and Round Oak Minerals. During the half, WHSP completed a merger with ASX listed investment company, Milton Corporation ("Milton", formerly ASX: MLT). The market value of Brickworks' shareholding in WHSP was $2.576 billion at 31 January 2022, down $504 million for the half.
The underlying income tax expense from continuing operations was $110 million, up from $27 million in the prior corresponding period, due to the higher earnings from Building Products and Property.
Net borrowing costs were down marginally to $9 million, with underlying interest cover finishing the half at a conservative 37 times.
Significant items increased NPAT by $251 million for the period. This comprised:
- A net profit of $279 million following WHSP's merger with Milton. This includes a $453 million profit on the deemed disposal of WHSP shares, offset by Brickworks share of a goodwill impairment incurred by WHSP, upon the merger.
- A $2 million profit in relation to other WHSP significant items.
- A $16 million cost arising from the net impact of the income tax expense in respect of the equity accounted WHSP profit, offset by the impact of fully franked WHSP dividend income, adjusted for the movements in the franking account and the circular dividend impact.
- Restructuring costs of $6 million (net of tax), primarily relating to the relocation of the Austral Masonry plant in Sydney. In North America, costs were incurred in relation to the closure of several retail outlets and the staged decommissioning of production at the York plant.
- COVID-19related costs of $5 million (net of tax), reflecting primarily the unabsorbed fixed costs in relation to manufacturing plant slowdowns, as a result of COVID-19 absenteeism in North America.
- Acquisition costs of $2 million (net of tax), primarily in relation to the purchase of IBC.
- Other costs of $1 million (net of tax), primarily in relation to the implementation of a new enterprise resource planning system across Australia
Statutory Earnings Per Share ('EPS') was 383 cents, up 710% on the previous corresponding period. Underlying EPS from continuing operations was 218 cents, up 266%.
4 The Joint Venture Industrial Property Trust is a 50/50% partnership between Brickworks and Goodman Industrial Trust
Brickworks Limited | ASX: BKW | ABN 17 000 028 526
738-780 Wallgrove Road, Horsley Park, NSW 2175 | info@brickworks.com.au | www.brickworks.com.au | Page 4 |
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Significant Items ($m) | Gross | Tax | Net |
Gain on deemed disposal of WHSP upon Milton merger | 725 | (271) | 453 |
WHSP impairment of Goodwill upon Milton merger | (249) | 75 | (175) |
Net impact of WHSP merger with Milton | 475 | (196) | 279 |
Other significant items relating to WHSP | 2 | - | 2 |
Income tax from the carrying value of WHSP | - | (16) | (16) |
Restructuring activities | (8) | 2 | (6) |
COVID-19 costs | (7) | 2 | (5) |
Acquisition costs | (3) | 1 | |
(2) | |||
Other costs | (2) | 0 | (1) |
Total (Continuing Operations) | 458 | (207) | 251 |
Cash Flow
Total cash flow from operating activities was $63 million, down from $76 million in the previous corresponding period, with cash generation impacted by increased inventory within Building Products operations.
Capital expenditure was $43 million during the period, with the Company midway through a significant investment program across a range of major projects. Project spend included a new brick plant at Horsley Park (NSW), a new masonry plant at Oakdale East (NSW) and deployment of a new enterprise resource planning system.
In addition, spending on acquisitions amounted to $64 million, representing the IBC purchase, completed in August 2021.
Balance Sheet
During the half total shareholders' equity was up $509 million to $2.989 billion, primarily reflecting the increased statutory profit, offset by dividends paid to shareholders.
Net tangible assets ('NTA') per share was $16.72 at 31 January 2022, up from $13.88 at 31 July 2021, due to the increase in total shareholders' equity.
Total interest-bearing debt was $705 million at the end of the period. After including cash on hand, net debt was $626 million, an increase of $108 million during the half. Gearing (net debt to equity) remained steady at 21%.
Brickworks has $1,015 million in committed debt facilities, with significant headroom across all banking covenants. At the end of the period, bank gearing5 as defined for covenant calculations was 17% (vs. a covenant of <40%), interest cover was 9.6x (vs. a covenant of >3.5x) and the leverage ratio was 3.4x (vs. a covenant of <3.5x).
5 Gearing, interest cover and leverage ratio outlined here are based on the Group's banking covenant calculation (and differ from standard calculations used for these metrics, as quoted elsewhere in this report). Interest cover and leverage ratio covenants only apply if gearing exceeds 22.5%.
Brickworks Limited | ASX: BKW | ABN 17 000 028 526
738-780 Wallgrove Road, Horsley Park, NSW 2175 | info@brickworks.com.au | www.brickworks.com.au | Page 5 |
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Brickworks Limited published this content on 23 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 March 2022 21:47:03 UTC.
