Looks like North America is where the capital and RoI of Aussie companies go to die. Shucks.
Non-cash impairment to Brickworks North America
Consistent with normal practice for the end of each financial period, Brickworks Limited (Brickworks) has
undertaken a review of the carrying value of its assets, as at 31 January 2025, in accordance with Brickworks’
accounting policies and the applicable accounting standards.
As a result, Brickworks is expected to recognise a post-tax non-cash impairment charge of approximately AUD
55 million (pre-tax AUD 74 million) to Brickworks North America1 in its 1H25 results (subject to finalisation of
results, audit processes and Board approval of those results).
Key drivers of the non-cash impairment are noted below:
• The Company foreshadowed at the Annual General Meeting on 26 November 2024 that market conditions in
North America were declining faster than previously anticipated. These challenging conditions have continued
through the balance of 1H25, driving a 13% reduction in revenue compared to the prior corresponding period.
Strong competition in the retail segment has resulted in a loss of some market share at the company-owned
Brickworks Supply store network.
• The reduced demand necessitated plant shutdowns during the period, to control inventory levels. This has
caused reduced plant efficiency and higher unit manufacturing costs, resulting in a significant decline in
earnings before interest, tax, depreciation and amortisation (EBITDA) margin during the half.
• The subdued building activity and scaled back production will delay the realisation of benefits expected to be
delivered from plant rationalisation and upgrades that have been completed in recent years.
• In addition, uncertainty around the timing of the market recovery, factors such as labour shortages, elevated
material costs, interest rate uncertainty and geopolitical volatility, has resulted in a moderation of the short to
medium term outlook for sales activity.
1H25 Earnings Update
The following update is provided in relation to 1H25 divisional earnings:
• Property EBITDA will be higher than the prior corresponding period, due primarily to the prior period
experiencing a significant expansion in industrial property capitalisation rates and a consequent devaluation
of Property Trust assets. In 1H25, capitalisation rates have remained relatively stable, and as such there has
been no significant change to the value of the Property Trust. In 1H25, development profit will be minimal as
construction at Oakdale East is in its early stages. Net trust income will be marginally higher compared to the
prior period.
• Building Products Australia is expected to deliver EBITDA broadly in line with the prior corresponding period,
with the impact of lower sales volume broadly offset by portfolio rationalisation and cost reduction initiatives.
• Building Products North America EBITDA will be significantly lower, driven by the impacts outlined above,
together with unusually extreme winter weather conditions in our key regions during the latter part of the half.
Until such time as Investment earnings are finalised, which are driven by the Company’s 25.65% shareholding in
Washington H. Soul Pattinson and Company Limited (Soul Patts), no guidance can be provided in relation to
Brickworks’ net profit after tax (NPAT).
Brickworks full year results remain subject to finalisation and audit and will be released on 20 March 2025.
The Brickworks Board has authorised the release of this announcement to the market.
1 Brickworks North America Cash Generating Unit (CGU)
