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Real estate industry

Brickworks Ltd Forecasts Short-Term Softening in Demand

Strategic Insights

— 1 min read

Australia's Brickworks Ltd (ASX:BKW) has announced a decline in annual net profit, largely due to its shareholding in Washington H Soul Pattinson & Co Ltd (ASX:SOL), which reported an 80% drop in net profit. The company forecasts a short-term softening in demand as government stimulus work subsides, citing high rental vacancy rates and poor affordability in the resource states of Queensland and Western Australia. Despite this, Brickworks remains optimistic about the long-term outlook for building products and has increased its exposure to commercial and industrial construction through recent acquisitions.

Key Takeaways:

  • Brickworks Ltd posted a 55% decline in annual net profit to A$138.79 million (US$132.64 million) for the 12 months to July 31.
  • The company's shareholding in Washington H Soul Pattinson & Co Ltd (ASX:SOL) reported an 80% drop in net profit to A$218.327 million.
  • Brickworks' underlying net profit excluding one-off items fell 3.1% to A$110.18 million.
  • Total revenue for Brickworks increased 11% to A$656.54 million.
  • The company forecasts a short-term softening in demand for housing, citing high rental vacancy rates and poor affordability in Queensland and Western Australia.
  • Brickworks has increased its exposure to commercial and industrial construction through the acquisition of Girotto and Gocrete for A$13.8 million and Sasso Precast Concrete in March.
  • The company believes that a return of investors and upgraders to the market is paramount for a sustainable recovery in housing construction.
  • Brickworks has called for government action to address the constraints leading to inadequate numbers of new dwellings being built in Australia.

Statistics:

  • A$138.79 million: Brickworks' annual net profit for the 12 months to July 31.
  • 80%: Decline in net profit reported by Washington H Soul Pattinson & Co Ltd (ASX:SOL).
  • 3.1%: Decline in Brickworks' underlying net profit excluding one-off items.
  • A$110.18 million: Brickworks' underlying net profit excluding one-off items.
  • A$656.54 million: Total revenue for Brickworks.
  • A$13.8 million: Acquisition price of Girotto and Gocrete.
  • 44.3%: Increase in Brickworks' building products group earnings before interest and tax (EBIT).
  • 14.5%: Increase in brick sales.
  • 20%: Increase in roofing sales.
  • 9.8%: Increase in masonry sales.

Sources:

  • "Australia's Brickworks Ltd forecasts short-term softening in demand." Asia Pulse, September 23.
  • "Brickworks Ltd posts A$138.79 million net profit for 12 months to July 31." AAP, September 23.

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