Ibstock sees sales and profits slide

Revenue at brick maker Ibstock fell 21% to £406m for the year ending December 31 2023, taking pre-tax profits down 71% to £30m, on the back of the slowdown in the new housebuilding market, and  an exceptional charge of £31 million,   following the restructuring programme undertaken during the year.

The group described this as a “resilient performance against a challenging market backdrop”, pointing to the comprehensive operational review undertaken during the year to reduce costs and ensure capacity meets the reduced market expectations for demand in the short term. The measures included the permanent closure of two clay brick factories and headcount reductions.

Despite this, the planned commissioning of the new Atlas brick factory in the West Midlands commenced on schedule, with production expected to ramp up over the course of the year, and the group is continuing the investments to build a market leading position in brick slips, with the first slips to be produced on the automated cutting line at Nostell in West Yorkshire expected to be delivered in the first half of 2024.

Although the activity in the early weeks of 2024 has subdued, in thine with the levels seen in the latter part of the 2023 year, the group anticipates, with a degree of caution, some improvement as the year progresses

CEO Joe Hudson,  said: “We have delivered a resilient performance for the year in what have been very difficult market conditions, and I am proud of the way that colleagues across the Group have responded in such challenging circumstances. Our results reflect both continued strong execution and the difficult but decisive actions taken to reduce headcount and realign capacity with near term market conditions. The organisational changes implemented during the second half of the 2023 year have created a leaner, more customer-focused business, which will deliver an enduring benefit for years to come.

“In doing so, we have also created a platform to accelerate innovation, with a particular focus on the sustainability of our products and processes. In combination with the strength of our brand and unrivalled product portfolio in the UK construction marketplace, we believe this will unlock significant value over the years ahead.

“As we focus on doing the right things to respond to market conditions in the near term, we are moving towards completion of the key investment projects that will underpin our growth as the market recovers. Our investment in new low cost, efficient and more sustainable brick capacity at our Atlas facility, and a significant capacity expansion in the fast-growing brick slips market, are on track and will support our medium-term growth objectives.

“Activity in the early weeks of 2024 has continued to reflect the more subdued demand environment experienced throughout the latter part of 2023. As we look further ahead, it is clear that market fundamentals remain supportive, with significant unmet demand for new build housing in the UK. The Group’s conviction in its medium-term prospects is underpinned by an expectation of a return to normalised conditions within its core markets combined with the incremental returns generated from our significant capital investment programme. Although the timing of this recovery is uncertain, Ibstock is well positioned to benefit and to deliver on our growth targets over the medium term.”