Brickworks swings to HY profit, warns 'historically low' activity
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The news: Construction materials supplier Brickworks swung to a first-half profit of $21 million, and lifted its interim dividend, despite warning of "historically low" residential building activity.
The numbers: The half-year profit compared to a loss of $52 million in the prior corresponding period. Brickworks declared an interim dividend of 25 cents per share, up from 24 cents a year earlier.
Total revenue declined 6% year on year to $516 million. The market value of the group's listed investments fell by 4%, or $119 million, during the period, totalling $3.16 billion at 31 January.
The context: Brickworks chief executive Mark Ellenor said that the market "remains challenging", with the company's half-year result impacted by "historically low" residential commencements, particularly in its key markets of Victoria and New South Wales.
Ellenor noted that building activity "continues to be subdued with extended approval timelines and higher costs". The usage of bricks, masonry and roof tiles is now typically lagging commencements by six months or more, he said.
Earlier this month, Brickworks shares tumbled after the company flagged a $55 million non-cash impairment and warned of lower earnings from its North America business amid challenging market conditions.
What they said: "Demand for building materials in Australia is expected to remain at a cyclical low, with subdued sales activity expected to continue for the remainder of the current calendar year," said Ellenor.
"Looking beyond the short-term market weakness, the broader macro-economic environment is showing signs of demand returning to the building materials sector, supported by the recent cut in the cash rate," he said.
The source: ASX
