Shares hit lowest level in 18 months
North America revenue drops 13%
Outlook dims on labour shortages, high interest rates cloud recovery prospects
Adds details from paragraph 2 onwards, analyst reaction in paragraphs 8 and 9
By Nikita Maria Jino
March 11 (Reuters) - Shares of Brickworks BKW.AX tumbled on Tuesday after the Australian firm warned of an impairment in its interim results, citing ongoing revenue pressures at its North American operations due to challenging market conditions over the past six months.
The stock fell as much as 10.5% to A$22.92, marking its lowest level since September 2023.
Brickworks, in which Washington H Soul Pattinson SOL.AX holds a nearly 43% stake, emerged as one of the top decliners on the ASX 200 .AXJO index, which was down 1.3% on the day.
The company said it expects to recognize a non-cash impairment charge of A$55 million ($34.5 million) against its North America business in its half-year results. At its annual general meeting in November 2024, Brickworks had warned of difficult trading conditions in the region.
"These challenging conditions have continued through the balance of 1H25, driving a 13% reduction in revenue compared to the prior corresponding period," Brickworks said in an exchange filing on Tuesday.
To manage excess inventory, the company was forced to shut down several plants during the period, leading to higher manufacturing costs and a decline in earnings before interest, taxes, depreciation and amortization (EBITDA) for the first half.
Brickworks cited continued uncertainty regarding the timing of a market recovery, with labour shortages, elevated material costs, interest rate pressures and geopolitical volatility weighing on its outlook.
As a result, the company said it has moderated its short- to medium-term expectations for sales activity.
Demand for the firm's products is slowing down as interest rates in the U.S. stay put and tariffs increase their prices, Jessica Amir, market strategist at trading platform Moomoo, said.
"(Brickworks) has a strong history of being a strong dividend payer and it appears that can continue. But the road ahead may be bumpy," she added.
The company could not provide a net profit after tax estimate since it would also include investment earnings from its 25.65% stake in Washington H Soul Pattinson.
($1 = 1.5924 Australian dollars)
(Reporting by Nikita Maria Jino in Bengaluru; Editing by Alan Barona)
((Nikita.Jino@thomsonreuters.com))
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