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Brickworks Limited (BKW) reported a 65.5% drop in profit for the six months to 31 January 2010. The company posted a profit of $88.2 million for the period, compared to $255.3 million a year earlier.

Brickworks expects its full-year result to be solid due to lower interest expense as a result of the conservative level of gearing and the improving performance of the Building Products division.

“This is due to the initial signs of recovery that are already evident in the housing market and the expansion of the Building Products division into new growth areas,” the company said.

“The Investments division is also forecast to maintain performance.”

Brickworks reported a normalised profit of $57 million, 12.1% higher than the previous corresponding period.

Chairman, Robert Millner, said this result highlighted increased earnings derived from the Building Products and Property divisions and lower interest payments.

The company said the Building Products division recorded an earnings before interest and tax result of $21.8 million for the half year, up 32.9% from the $16.4 million reported in the previous corresponding period.

Brickworks attributed the increase to higher volumes and higher average selling prices.

The Land and Development division produced an EBIT of $12.3 million for the half year, an increase of 1.7% from the previous corresponding period.

Brickworks’ said its investment in Washington Soul Pattinson & Company (WHSP) contributed $39.9 million for the half year, down 16.5% from $47.8 million in the previous corresponding period.

The company said the market value of its 48.25% share holding in WHSP was about $1.4 billion, up 24.1% from $1.125 billion at 31 July 2009.

Managing director, Lindsay Partridge, said the company undertook significant steps to improve the business and strengthen its financial position.

“A total of $421.9 million was raised through a successful Share Purchase Plan, the sale and leaseback of the Wollert plant and the sale of surplus properties and non-core assets,” Mr Partridge said. 

“Consequently, net debt to capital employed was reduced to 10.8%.”

Brickworks declared an increased interim dividend of 13c per share for the half-year, up from 12.5 cents per share for the previous corresponding period.  

At the close of trade yesterday, Brickworks shares were trading at $12.60.

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