Brickworks emerges as powerful manufacturing force

Building products, property and investment group Brickworks’ latest annual report reveals a company still focused on manufacturing but transforming itself into a diverse powerhouse capable of sustainable, strong growth.

The Sydney company reported a revenue rise but profit fall compared to the previous year, however this did not disguise the extraordinary improvement in the company’s fundamentals.

EBIT was down 28 percent to $709.3 million on revenues up eight percent to $1.18 billion, with underlying net profit after tax down 32 percent to $508 million.

The previous year’s profit had been boosted by a one off profit in relation to the deemed disposal of Washington H Soul Pattinson (WHSP). This together with the company’s property arm which recycles surplus industrial land into industrial estates are a large part of the story.

Chairman Robert Millner said: “As at the end of FY2018 our gross assets, as recognised on the balance sheet were $2.9 billion.

“This has since increased by $3.2 billion, and now stands at over $6.1 billion.”

Property drove the rise in assets as did the company’s equity investment in WHSP, now valued on market at $3.1 billion, but recognised in the balance sheet at $2.1 billion.

The company’s most profitable business remains the Australian brickmaking business’ where Brickworks has been rationalising operations, investing in automation of operations and freeing up surplus land.

Segment results saw EBIT down 17 percent to $53 million on inflationary pressures, a significant decrease in new residential construction and extended construction deadlines as builders suffered about shortages.

During the year the company exited unprofitable brickmaking in Western Australia.

In New South Wales construction of a new brick plant at Horsley Park, Sydney was substantially completed, after significant delays in construction during the Covid-19 pandemic.

With final commissioning underway the plant can produce 130 million bricks a year, and allows the closure of a site at Oakdale East and consolidation of operations at Horsley Park.

In North America the company’s successful entry into the prestige market in the North East continues, with EBITDA of $40 million and EBIT of $13 million recorded on sales up four percent to $447 million.

The company has purchased a number of businesses in the US, closed seven brick making plants and transferred more than 170 products from these plants to other manufacturing sites. Sales are through 26 company owned shops named ‘Brickworks Supply’.

Managing Director Lindsay Partridge said the business faced challenges, but was very well placed to deliver strong performance and shareholder returns.

Partridge said: “Having modernised our manufacturing fleet and expanded scale over the past five years through our significant investment programme, our priority has now turned to maximising the returns delivered by the enlarged asset base and improving cash generation.”

Picture: Brickworks