The Brickworks Limited (ASX: BKW) share price is on the move on Thursday morning.
At the time of writing, the buildings products company's shares are up 2% to $23.50.
This follows the release of the company's half-year results.
Brickworks share price higher on half-year results
- Revenue up 13% to $584 million
- Underlying EBITDA up 25% to $607 million
- Underlying net profit after tax up 24% to a record of $410 million
- Interim dividend up 5% to 23 cents per share
What happened during the first half?
For the six months ended 31 January, Brickworks reported a 13% increase in revenue to $584 million. This reflects an 11% increase in Building Products Australia revenue to $364 million and an 18% lift in Building Products North America revenue to $220 million.
Growing even quicker was the company's underlying EBITDA, which increased 25% over the prior corresponding period to $607 million. This was driven largely by its property joint venture with Goodman Group (ASX: GMG), which offset flat EBITDA from its Building Products operations.
Brickworks' property business generated EBITDA of $453 million, with the sale of Oakdale East Stage 2 contributing strongly to its earnings.
This ultimately led to the company reporting a 24% increase in underlying net profit after tax to a record of $410 million, which allowed the Brickworks board to increase its fully franked interim dividend by 5% to 23 cents per share.
Management commentary
Brickworks' managing director, Lindsay Partridge, was pleased with the half. Commenting on the strong-performing property business, he said:
Despite increasing interest rates, we are continuing to experience strong demand for prime industrial property. Major customers are seeking well-located sites, with large land footprints, on which to develop specialised, high-value facilities. The addition of a significant new parcel of land at Oakdale East is well suited to accommodate this demand. This new Estate will provide an additional development pipeline of around five years and once completed, is expected to deliver around $1 billion in additional leased asset value to the Trust.
Outlook
Management appears optimistic on the company's property business during the second half. Partridge adds:
Within our Property Trusts, the development pipeline is strong, and we expect a significant increase in rental income over the coming years as new developments are completed and rent reviews are undertaken.
And while the managing director acknowledges that difficult trading conditions are coming for its Building Products businesses, it remains cautiously optimistic on its near term outlook. He explained:
Across Building Products, we are confident that sales will remain resilient in the second half. However, there is no doubt that a slowdown in activity will arrive before the end of the calendar year, once the existing pipeline of work is built out.
The impact of the slowdown is likely to be more significant for our Australian business, where exposure to detached housing is greatest. By contrast, the North American operations have a broader end market exposure, and stand to benefit from the relative strength of the non-residential segment. Across both countries, manufacturing costs will benefit from the extensive plant rationalisation and upgrade activities completed over the past few years.
