Brickworks’ share price edged higher on $746 million profit

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The Brickworks Limited (ASX: BKW) The stock price is edging its way into the green in morning trading amid the company’s release of its FY22 annual results.

Shares in Australia’s largest building products maker are currently trading at $21.76 apiece, up 0.32%, after falling to $21.05 shortly after the market opened.

Let’s review the highlights of the report.

What did Brickworks report?

Brickwork’s standout operating segment for the year was real estate. Namely, its industrial real estate portfolio around Sydney and Brisbane. Total segment profit increased 155% year-on-year to $644 million.

The company said its portfolio benefited from a “strong increase in valuation in response to growing demand for prime logistics and warehousing space. In addition, strong development activity contributed to the result of the ‘Immovable.

Meanwhile, Brickwork’s revenue for building products also grew in Australia and the United States. This would have been helped by the company’s investment in Washington H. Soul Pattinson and Co. Ltd (ASX: GROUND).

Building Products revenue in Australia increased 7% to $694 million and EBITDA increased 110% to $205 million.

During the same period, North American Building Products revenue grew significantly more, recording a 97% gain to $399 million, while EBITDA increased 84% to $48 million.

Brickwork’s fully franked dividend of 41 cents per share has a record date of Nov. 2 and an expiration date of Nov. 1. The expected payment date is November 23.

What else happened in FY22?

The value of the company’s joint venture trust jumped in FY22 to $1.54 billion from $631 million in FY21.

Additionally, Brickworks has launched another joint venture real estate trust with Goodman Group (ASX: GMG) comprising 15 manufacturing plants. The total value of the trust is $416 million.

Brickworks also notes that despite its considerable investments over the years, its leverage remains low, with a net debt to equity ratio of 15%.

What did management say?

Brickworks Managing Director Lindsay Partridge commented on the growth of his Industrial JV Trust:

One of the highlights of the year was the completion of Amazon’s state-of-the-art fulfillment centre, the first facility in Oakdale West, Sydney. This follows many years of planning and investment in the site preparation and infrastructure of this area. With other facilities now nearing completion, Oakdale West is poised to become one of the most prestigious industrial property neighborhoods in the Southern Hemisphere. Further estates in Oakdale South (Sydney) and Rochedale (Brisbane) have now been fully built, following the completion of final developments in these areas in the second half of the year.

And after?

Partridge described the future as having “an increasingly uncertain outlook”. Some factors at play would be rising interest rates and the threat of recession.

He also made the following comment about what the future might look like:

There is a significant development pipeline within the Industrial JV Trust, and the continued development of Oakdale West will drive asset growth over the next few years. The planned sale of the balance of Oakdale East to the Trust in FY23 will support continued growth over the medium term. We continue to explore real estate opportunities in North America, and recently signed a non-binding memorandum of understanding with Goodman to explore the development of the Mid-Atlantic site in Pennsylvania. From FY23, Property will also include revenue generated by the Brickworks Manufacturing Trust.

Brickworks Stock Price Overview

Brickworks’ stock price is down almost 12% since the start of the year.

During this time, the S&P/ASX 200 Index (ASX:XJO) is around 11% lower over the same period.

The company’s current market capitalization is $3.28 billion.

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