Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site. Click here to give us your advice and feedback.

Brickworks (ASX:BKW) trading update, is it a buy?

Is Brickworks (ASX:BKW) a buy after providing a trading update to the market?

Is Brickworks (ASX: BKW) a buy after providing a trading update to the market?

What is Brickworks?

was listed on the ASX in 1962 and has paid a dividend every year since then. The construction business has four divisions – Building Products Australia (eg Austral Bricks), Building Products North America (Glen Gery), Property and Investments (it owns 39.4% of Washington H. Soul Pattinson & Company).

What was in the Brickworks trading update?

The building products business has taken a number of actions to respond to the impacts of COVID-19.

It has reduced production to control stock levels across all of its building products operations. Brickworks has also accelerated its ‘plant rationalisation’ plants in the US. The Bigler plant has closed and the York plant has been converted to just one handmade kiln only.

Since the start of the year there has been more than 200 staff redundancies including the plant rationalisation activities. This is around 10% of the workforce, which amounts to around $20 million of yearly costs. All non-critical capital expenditure has been deferred indefinitely.

The company has accelerated initiatives like digital sales and marketing, new product lines, revamped product lines, online training and development programs.

How Brickworks’ divisions are actually performing

Management said that sales revenue for the four months to May 2020 in Australia was down 10% compared to the prior corresponding period. Brickworks said that it was resilient. Plant closures have helped cashflow, but impacted earnings. But Brickworks did generate a profit for this period. Pleasingly, it has received development approval for the new $125 million brick plant at Horsley Park in NSW.

In North America, the building products business there estimated like for like sales volume was down more than 30% in April and May due to lockdowns in many states. In the financial year to date this division has made a profit, but it has seen negative earnings in recent months due to COVID-19.

Development activity has continued at Oakdale in Sydney for the property trust. Civil works are underway. The $75 million Austral Masonry plant for this site has commenced construction.

Is it time to buy Brickworks?

The Brickworks share price is currently up around 1%. The medium term outlook for building activity remains unclear but governments in both Australia and the US have said that construction is important for a recovery. A shift to online shopping is expected to boost demand for Brickworks’ property trust. The company said it’s in a strong position, even with a lot of uncertainty.

I think Brickworks could be a good way to leverage an Australian economic recovery. The government has been saying how important construction is for the country. The WHSP shares should also add long term value creation for Brickworks over time. I would buy shares today for the long term.

[ls_content_block id=”14945″ para=”paragraphs”]

Disclosure: Jaz owns shares of Washington H. Soul Pattinson & Company at the time of writing, but this could change at any time. 

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Skip to content