Brickworks’ full-year profit slipped 11.9 per cent to $154.6 million as record earnings from its industrial property portfolio failed to offset the impact of Australia’s cooling housing market.
Higher energy prices and lower demand over the 12 months to July 31 contributed to a 18 per cent fall in earnings at the Sydney-based conglomorate’s Australian building products division.
Investments earnings fell 16 per cent after Round Oak Minerals – which is part-owned by Brickworks through its interest in Washington H Soul Pattinson – reported a large full-year loss.
But once $37 million in one-off hits and a $34 million impairment against Brickworks’ Auswest Timbers hardwood assets were stripped out, underlying profit from continuing operations hit a record $234 million.
The four per cent rise in underlying profit and a forecasted drop in energy costs apparently cheered investors, who drove Brickworks’ shares up by as much as 8.1 per cent on Thursday.
“Operational performance across most divisions was encouraging, given the headwinds associated with declining market activity and significantly higher energy prices, which added $12 million in costs compared to the prior year,” chief executive Lindsay Partridge said.
“On the east coast, earnings in Austral Bricks and Bristile Roofing proved resilient, particularly in Victoria.”
Mr Partridge flagged a soft first half to FY20 for local building products but said energy costs should fall as Brickworks transitions to the wholesale gas market in January.
Brickworks shares were still 6.12 per cent higher at $17.50 by 1225 AEST.
Austral Masonry earnings fell but a surge in demand improved Austral Precast results on the back of the nationwide cladding and structural integrity building crisis.
Brickworks raised $208 million late last year by trimming its interest in Soul Patts from 42.7 to 39.4 per cent, netting $208 million to fund North American expansion.
The ASX-listed group recorded $121 million in revenue over eight months from its purchases of US brickmakers Glen-Gery and Sioux City Brick.
“These acquisitions followed a thorough strategic review, which identified the North American brick industry as a highly attractive long-term growth opportunity for Brickworks,” Mr Partridge said.
“Our company has established a competitive advantage within the brick industry that can be applied in the United States.”
Brickworks raised its final dividend by two cents to 38 cents.
BRICKWORKS FY PROFIT DROP
* Revenue up 17pct to $919m
* Profit down 11.9pct to $154.6m
* Fully franked final dividend up two cent to 38 cents