Brickworks Limited

Friday, April 23rd, 2010

Brickworks Limited (ASX:BKW) was founded in 1934 and listed on the ASX in 1962. BKW is a manufacturer and distributor of building products with operations in all states of Australia and New Zealand. It is Australia’s largest manufacturer of bricks. BKW has extensive interests in property development as a result of legacy of brick pits that are now located in sought after locations in number of capital cities. The company has a 48% shareholding in Washington H. Soul Pattinson (ASX:SOL) which in turn has a 45% shareholding in BKW.

Divisions

Austral Bricks is the largest producer of pavers, bricks, building materials, façade systems and landscaping products in Australia. The success and size of this business has allowed it to be at the forefront of manufacturing technology. For example, the introduction of robotic brick handling equipment at plants around Australia has enabled reduced manufacturing costs and increased production flexibility.

Austral Masonry was formed via the acquisition of a number of concrete masonry manufacturers. Through organic growth and acquisition Austral Masonry has become a significant player in the market for grey block building materials.

Bristile Roofing was established in 1929 when Sir Lance Brisbane opened his first terracotta products factory in Perth. The division is now one of Australia’s largest manufacturers of terracotta and concrete roof tiles. It was acquired by BKW from Futuris Corporation (now known as Elders Limited).

Auswest Timbers manufactures a range of timber products including heavy structural timbers, roof tile battens through to floor boards and decking. The company has manufacturing plants in Western Australia, Victoria and the A.C.T.

Brickworks Land and Development holds property through its Property Trust and Land & Development arms. In general when BKW develops a new quarry it is located on the outskirts of a city and operates for quite some time manufacturing product while the city grows. At the end of its life as a quarry it is generally surrounded by suburbs and the value of the land has significantly appreciated. At this point BKW sells or develops the site for residential or commercial/industrial use. Typically residential land is sold whilst industrial land is transferred into a trust that provides a rental income stream from the developed facilities. The property trust has grown into a solid long term income stream for BKW. Over time the property held on the balance sheet at cost is expected to be realized at multiples of its carrying value adding significant value to shareholders. The timing however is not possible to predict.

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