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Results: Brickworks delivers record profit result in FY 2019

The Brickworks Limited (ASX: BKW) share price will be on watch this morning following the release of the conglomerate’s full year results.

How did Brickworks perform in FY 2019?

For the 12 months ended July 31, Brickworks posted a 17% increase in total revenue from continuing operations to $919 million. Underlying earnings before interest, tax and depreciation (EBITDA) from continuing operations was $346 million, up 12% on the prior year.

On the bottom line the company reported a record underlying net profit after tax from continuing operations of $234 million, which was a 4% increase on the prior corresponding period. On a statutory basis, which includes discontinued operations and the impact of significant items, Brickworks posted a 12% decline in net profit after tax to $155 million.

The company’s chairman, Robert Millner, advised that its diverse operations played a key role in its record profit.

He said: “The strength of the company’s diversification strategy underpinned the result. A significant increase in Property earnings and the initial contribution from our newly acquired brick making operations in North America, more than offset a decline in Investments and the impact of a cyclical downturn on Building Products Australia earnings.”

“As well as delivering record underlying earnings, the Company continues to build considerable asset value for shareholders. During the year, the inferred net tangible asset backing of the Group increased by $86 million to over $3.3 billion, and over the past decade it has more than doubled,” he added.

The Brickworks board declared a fully franked final dividend of 38 cents per share, up 6% on the prior corresponding period. This brought its full year dividend to 57 cents per share, which is also 6% higher than the same period last year. Based on its last close price, this works out to be a fully franked 3.5% dividend yield.

Outlook.

No formal guidance was given for FY 2020, however, Brickworks’ managing director, Mr. Lindsay Partridge, appears cautiously optimistic on the year ahead.

Whilst the Building Products Australia division is expected to have a soft first half, the chief executive expects “the market to strengthen, based on the current level of home builder sales.”

The North American business is expected to benefit from the recent acquisition of Sioux City Brick and Mr Partridge is “encouraged by both organic as well as acquisition-based growth opportunities” in this market.

And the outlook for the Property division appears positive. Mr. Partridge said: “Activity within the Trust remains strong, with developments at Oakdale South expected to drive growth in rent and asset value over the next few years. Pending final development approval, Oakdale West will then provide the Property Trust with significant further growth for a decade.”

It hasn’t just been Brickworks releasing its results today. Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), of which Brickworks is a major shareholder, released its results and reported a 7.1% decline in profit after tax to $247.9 million this morning.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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