Brickworks Limited (ASX: BKW) is going to hand in its FY21 half-year result today. I’m on the lookout for a number of different things in that report.
Brickworks is a business with a few different segments. It has an Australian building products division, a US building products division, a large holding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares and a 50% ownership of an industrial property trust.
I believe that Brickworks has a compelling future and it’s one that I particularly like as an ASX dividend share idea.
In the result, I’m going to have my eye out for these three things:
Australian demand turning into profit growth
At the AGM a few months ago, Brickworks said that the Australian building products division had made a strong start to FY21 and that demand was good.
I’m interested to see whether this continued for the rest of the half-year period and what management’s comments are about the rest of the financial year. Brickworks does well with the things in the company’s control, such as investing in high-quality facilities and achieving efficiencies. But what the things outside of its control?
Will the growth continue over the rest of the year? Or will it slow down?
A US recovery?
Another area I’m particularly interested to see is the progress (or not) that’s going on in the US with its acquisitions.
The US has been heavily impacted by the COVID-19 pandemic, and certain sectors have been taking the brunt of it. At the AGM, Brickworks said that its US sales were below expectations partly because of project delays.
Are those projects still being delayed? Are there green shoots of a recovery? How effectively has Brickworks managed to find those efficiencies? Hopefully Brickworks can give some details on these matters.
Progress with the mega warehouses
A key part of my positive outlook on Brickworks shares over the next few years is the planned mega warehouses for Coles Group Ltd (ASX: COL) and Amazon, being built within the industrial property trust.
Once those two huge warehouses are built, the profit distributions from the trust to Brickworks are expected to increased by at least 25%, as well as increasing the gross assets by around $900 million. That’s a big increase.
These properties are important for the future growth of Brickworks. Are they on time and on track budget wise? Are there any more details it can tell the market about the rental profit growth expectations? What about the rest of the spare land that could be built on – are there any more deals?
Keep a look out for the Rask Media coverage
I’ll be providing coverage of the Brickworks result later this morning after the official release of the numbers. I will share my thoughts on how the company performed.
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