BRICKWORKS LIMITED Brickworks Limited (ASX: BKW) told shareholders at its 81st Annual General Meeting today that a strong first quarter from Building Products and Property has positioned the company to deliver an improved result in financial year 2016.
Chairman Mr Robert Millner said: 'The strong start to the year again highlights and validates our strategy to pursue sustainable growth from our diversified and well balanced portfolio of businesses.'
'Brickworks has consistently demonstrated its ability to deliver shareholder value, with the company delivering outstanding returns over both the short and long term,' said Mr Millner.
FY2016 Trading Update1The strong momentum in the Building Products Group has continued, with revenue up 9% in the first quarter of 2016, compared to the prior corresponding period. Building Products EBIT was up 24% to
$16.4 million for the quarter, driven by strong performances from New South Wales and Victorian operations, and a significant improvement from Austral Precast.
Brickworks' Managing Director Mr Lindsay Partridge said: 'Demand for our products remains very strong, buoyed by increasing building approvals and a large backlog of work that has developed over the past twelve months.'
'Austral Bricks earnings were higher across all states except Queensland and South Australia, where production was impacted by unscheduled kiln repairs undertaken during the period,' Mr Partridge said. 'The uplift in Austral Precast was particularly encouraging with this business benefiting from a range of productivity improvements and unprecedented demand in Queensland,' he added.
The Land and Development Group also had a strong start to the year, posting an EBIT of $15.9 million for the quarter on the back of significant revaluation profits within the Property Trust.
At the Oakdale Estate in New South Wales construction work is well underway on two new DHL facilities, scheduled for completion in May 2016, as well as works to improve site access and enhance the area's status as a prime location for warehousing and logistics premises. Tenant inquiry is very strong, with the latest pre-commitment secured in early November for an 8,000m2 facility.
At Rochedale North in Queensland, construction of the initial Beaumont Tiles facility is nearing completion, with a second pre-commitment now secured with Franklyn Blinds for an 8,000m2 site, on a ten year lease term.
OutlookMr Lindsay Partridge said: 'With a good first quarter result and a strong order book, the Building Products Group is on track to deliver another increase in earnings in financial year 2016.'
'Building approvals along the east coast remain robust, and together with the significant backlog of work that has developed, this is translating to even greater levels of demand. Some businesses such as Austral Precast in Queensland are only limited by available plant capacity, whilst in Austral Bricks and
1 Unaudited and pre significant items
Bristile Roofing external factors such as the availability of titled land and building trade shortages remain a concern.'
'Meanwhile in Western Australia, we are now well past the peak in housing approvals, however this impact will be offset by a number of business improvement initiatives that will deliver significant benefits.'
'A development application has been lodged for an overhaul of the currently mothballed brick plant at Cardup, south of Perth. Once completed, this will allow the rationalisation of existing operations and valuable property assets to be released, and place Austral Bricks in a very strong competitive position in Western Australia, with improved environmental performance'.
Following the significant revaluation profit recorded in the first quarter, representing an approximate 50 basis point reduction in capitalisation rates, Land and Development earnings for 2016 are expected to exceed the prior year. Over the longer term, demand within the Trust is expected to remain strong, with available industrial space for lease in western Sydney severely limited.
The diversified nature of Brickworks' holding in WHSP is expected to deliver steadily increasing earnings and dividends to Brickworks over the long term.
Brickworks' final fully franked dividend of 30 cents per share will be paid on 25th November.
Brickworks also announced that it had submitted a $130 million State Significant Development application to the New South Wales Government for the construction of a 600,000 tonne lightweight aggregates plant at Horsley Park. Lightweight aggregates are widely used overseas in readymix concrete, precast concrete, masonry, asphalt, geotechnical fills, and a range of other applications. At around half the weight of traditional aggregates, their use can enhance building design and deliver significant project cost savings, as well as transport cost reductions and manual handling benefits.
Once all regulatory approvals have been secured, the project will be subject to final Board approval, with the subsequent construction and commissioning process to take around 18-24 months.
Mr. Partridge said: 'The project would clearly offer market diversification and growth opportunities to the company, and increase the utilisation of our existing land, raw materials and other assets. More broadly, the project would create around 50 new jobs in western Sydney, and deliver a unique new product that would benefit the local construction industry as the city embarks on a significant wave of major infrastructure projects over the next decade.'
BRICKWORKS LIMITED (ASX CODE: BKW) www.brickworks.com.au
Lindsay Partridge, Managing Director Tel: (02) 9830 7800
Robert Millner, Chairman Tel: (02) 9232 7166
Media inquiries:Greg Baxter, Newgate Communications Tel: (02) 9232 9500 or 0419 461 368
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