The Brickworks Limited (ASX: BKW) share price is falling on Thursday.
In morning trade, the building products company's shares are down 4% to $28.02.
This follows the release of its half-year results before the market open.
Brickworks share price tumbles on first-half loss
- Total revenue down 6% to $547 million
- Underlying EBITDA loss of $40 million
- Underlying net loss of $37 million
- Fully franked interim dividend up 4% to 24 cents per share
What happened during the half?
For the six months ended 31 January, Brickworks reported a 6% decline in revenue to $547 million. This reflects an 11% decline in Australian Building Products revenue to $323 million and broadly flat Building Products North America revenue of $224 million.
Things were much worse for the company's earnings due to its Property Trust segment, which posted an EBITDA loss of $178 million for the period. This includes a $233 million non-cash devaluation on its assets following the independent valuation process. Management notes that the loss reflects an increase in capitalisation rates across the portfolio to 5.1% from 4.1% in July 2023.
It is also worth noting that this devaluation follows $615 million in revaluation gains being delivered in the prior five years, as capitalisation rates compressed.
This offset 5% EBITDA growth from the Building Products Australia business to $52 million and a 43% lift in Building Products North America EBITDA to $21 million, which ultimately led to Brickworks recording an underlying EBITDA loss of $40 million and a net loss of $37 million for the half.
Despite this loss, the company's board elected to increase its interim dividend for the 10th year in a row to 24 cents per share. This will be paid to eligible shareholders on 1 May.
Outlook
The company's managing director, Lindsay Partridge, acknowledged that Brickworks faces short term challenges, but believes its long-term outlook is very positive. He said:
Although macroeconomic conditions may cause some short-term challenges across the portfolio, each of our businesses have a strong longer-term outlook.
Within Property, structural trends towards e-commerce and the digital economy will continue to drive demand for our prime industrial facilities for many years to come. Our Building Products business is well placed to meet the demands of the expected building boom over the next decade in Australia and North America.
Partridge also remains confident on the company's investment in Washington H Soul Pattinson and Company Ltd (ASX: SOL). He adds:
Meanwhile, WHSP is expected to continue to deliver a stable and growing stream of earnings and dividends over the long term.
Following a period of significant investment, our short-term priority is to maximise cash generation. With our diversified portfolio of high-quality assets, Brickworks is well placed to meet any future challenges and continue to deliver good performance for shareholders.
The Brickworks share price is up 25% over the last 12 months.
