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Highlights

  • BKW expects 2H25 property EBITDA to exceed 1H25, supported by revaluation and development profits
  • Brickworks to record AUD 75 million post-tax impairment for its North America Building Products unit
  • BKW shares rose 0.55% to AUD 34.49 following the 2H25 trading update

Brickworks Limited (ASX:BKW) is a diversified Australian company engaged in property development, investment, and the manufacture of building products across Australia and North America. Its property division includes interests in industrial property trusts and development projects, while its building products operations span a range of construction materials. The company also holds a significant long-term investment in Washington H. Soul Pattinson and Company Limited.

The company has provided a trading update ahead of its full-year FY25 results, with expectations of higher second-half earnings in its property division offset by a significant impairment charge to its North American building products operations.

In the property segment, Brickworks forecasts earnings before interest, tax, depreciation, and amortisation (EBITDA) for 2H25 to exceed 1H25 levels, supported by a revaluation gain of AUD 65 million related to its Industrial Property Trust. The revaluation is attributed to a moderate 15 basis point compression in capitalisation rates during the second half of the year.

In addition to revaluation gains, the company expects to report approximately AUD 39 million in development profit from Oakdale East Stage 2, based on project progress by the end of July 2025. Net trust income for the second half is anticipated to be broadly consistent with the first half, excluding one-off profits from property trust sales reported earlier in the year.

In the building products segment, Brickworks said that its Australian operations are expected to deliver second-half EBITDA slightly ahead of 1H25, despite ongoing headwinds in the construction sector. In North America, however, the business continues to face challenges, with economic uncertainty, elevated interest rates, and subdued consumer sentiment leading to weaker-than-expected market conditions in 2H25.

As a result of the continued downturn in the U.S. building sector, Brickworks anticipates recording a post-tax, non-cash impairment charge of approximately AUD 75 million (pre-tax AUD 102 million) against the carrying value of its North American building products division. The company said this outcome reflects revised earnings forecasts and the outlook for a slower recovery in demand, as well as reduced utilisation of manufacturing capacity, which has placed pressure on margins and cost efficiency.

The impairment assessment follows Brickworks’ regular review of asset values ahead of the financial year-end in line with accounting standards and policies. The review highlighted persistent softness in North American market conditions, which has fallen short of previous expectations.

Despite the challenges in North America, the company noted that its overall group net profit after tax (NPAT) remains uncertain, as investment earnings linked to its 25.64% stake in Washington H. Soul Pattinson and Company Limited (Soul Patts) are yet to be finalised. Therefore, no formal NPAT guidance has been issued at this time. Brickworks reiterated that its full-year FY25 results are still subject to audit and finalisation.

The company also confirmed that the trading update does not affect its proposed merger with Soul Patts, announced on 2 June 2025. The transaction, described as transformative by both parties, remains on track.

As of 30 June 2025, Brickworks shares were trading 0.55% higher at AUD 34.49.