The Brickworks Limited
(ASX: BKW) share price is in focus this week after delivering its FY21 report to investors.
Brickworks’ FY21 report
There are a few different divisions within the business.
Australia
The building products Australia segment, which includes brickmaking, roofing and masonry, saw EBITDA (EBITDA explained) increase by 7% to $97 million. EBIT increased 36% to $44 million. This profit growth was down to a reduction of operating costs, which helped margins across all business units and regions. There was strong demand, though lockdowns in Sydney and Melbourne meant sales were stifled a bit.
US
The building products North America EBITDA increased 10% to US$20 million. However, EBIT dropped 6% to US$6 million. Building activity was lower with restrictions for some periods. COVID also led to manufacturing disruptions. However, management said that the business is rapidly growing. Brickworks pointed to the acquisition of IBC which will increase the scale of its distribution network and lead to higher sales volume.
Property trust
Its property trust delivered EBIT of $253 million, primarily due to earnings from the 50/50 joint venture with Goodman Group (ASX: GMG).
The property trust assets were revalued during the year and this led to a revaluation gain of $149 million. Total assets within the property trust now stands at around $2.7 billion. After including debt, Brickworks’ share of net assets was $911 million. The net rental profit increased 3% to $31 million.
Management said that unprecedented customer demand for industrial property has resulted in lease pre-commitments ending the year at a record level.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Brickworks will own 26.1% of WHSP after the merger with Milton Corporation Limited (ASX: MLT).
The company noted that this expansion will provide WHSP with increased scale, diversification and liquidity to go after more investment opportunities.
It’s expecting WHSP to deliver superior long-term returns and consistent dividend growth well into the future. The value of its WHSP stake increased $1.2 billion during the year, the value of the shares was $3.4 billion when Brickworks released its result.
Brickworks dividend
The board decided to pay a full year dividend of $0.61 per share, which was an increase of 3%. That currently represents a fully franked dividend yield of 2.4%.
Final thoughts on the Brickworks share price
The Brickworks share price has been a solid performer over the last year – rising by 34%.
It’s not as good value as it was a year ago. But, let’s just look at a couple of the asset values. The WHSP shares were worth $3.4 billion and Brickworks’ share of the property trust assets were $911 million. Combined, these assets are worth more than $4.3 billion. According to the ASX, its market capitalisation is $3.8 billion. So there’s a discount there (not including the building products business or net debt).
Brickworks says that its current inferred net assets per share is worth $31.7.
I’d be happy to buy a parcel of shares for the long-term, though there may be some volatility over time. I think it’s one of the leading ASX dividend shares.
