Brickworks shares drop despite dividend boost

The news: Brickworks shares have fallen 3.1% despite the building materials company promising a higher total dividend to shareholders tomorrow, as the bonus failed to sweeten its sub-par return on capital.

The numbers: Brickworks will pay an increased fully franked final dividend of 42 cents per share to shareholders tomorrow, taking the full year dividend to 65 cents per share, up 2% on the previous year. The company's total earnings before interest and tax (EBIT) slumped 28% to $704 million in the 2023 financial year. With total assets of $6.1 billion and total current liabilities of $305.2 million, Brickworks' return on capital employed is 0.77%, significantly undershooting the basic materials average of 5.6%. Brickworks shares were trading 3.1% lower at $25.37 by 1:15pm AEDT.

The context: Brickworks' declining 2023 results were partially due to its strong performance in 2022, which included a one-off windfall after it offloaded part of its stake in Washington H Soul Pattinson & Company as part of the latter's merger with Milton. Market tailwinds in FY22 shifted in FY23, as valuations slumped and high interest rates collided with inflated material costs, supply chain issues and labour shortages.