‘Difficult’ trading hits Brickworks

Brickworks, the nation’s biggest brickmaker, says it will take a big hit to its half-year profit.

The Brickworks profit has hit a wall

The nation’s biggest brickmaker says it will take a big hit to its half-year profit, with Brickworks following major shareholder Washington H. Soul Pattinson in downgrading profit forecasts on Thursday.

Brickworks had already flagged a soft first half to the year, which ends in January for the company, blaming high energy prices in Australia, along with low levels of building activity and “particularly difficult conditions” in its West Australian operations.

But Brickworks owns a 39.4 per cent stake in Soul Patts, under a cross-shareholding that also has Soul Patts controlling 43.8 per cent of Brickworks. Soul Patts downgraded its own half-year expectations on Wednesday, saying its statutory net profit after tax would plunge to between $45m and $55m for the six months to January 31, from $179m a year earlier.

Ordinary profit, excluding one-off items, would drop to between $120m and $130m, from $186m.

Brickworks followed the Soul Patts downgrade with its own on Thursday, saying it expected statutory profit to tumble 49 per cent from the $115m it booked in the six months to the end of January last year.

Underlying net profit would fall about 37 per cent from $160m, the company said, to about $101m. The company said it expected to deliver a strong result from its North American building products division, and a solid result from its property arm — albeit below the $132m in earnings before tax and interest the previous financial year, as it had not made any land sales in the first half of the 2020 financial year.

Brickworks said it expected the January half to be the “low point” of its Australian building products arm.

The company will release its first-half financial results on March 26.

Brickworks shares shed 72c, or 4.6 per cent, to close at $15.15 on Thursday. Soul Pattinson shares fell another 84c, or 4.5 per cent, to $17.94.