Ibstock revenues rise 5% as housebuilders import fewer bricks

Britain’s largest brick manufacturer Ibstock anticipates full year earnings will be on target as revenue rose due to growing house builder activity in the second half of the year, while brick imports declined.

In addition, the FTSE 250 company announced that its defined benefit pension scheme will close to future accrual effective from 31 January and scheme members will join the defined contribution scheme from 1 February.

Revenue for the calendar year increased 5% compared to last year, while revenue from clay and concrete products in the UK, which represents about 80% of total revenue, was up 2%.

Ibstock said that the increase in revenue was due to low single digit volume growth for clay brick and further volume and price growth in the concrete businesses.

Adjusted earnings before interest, depreciation and amortisation (EBITDA) was said to be in line with expectations.

Brick sales volumes for the year exceeded 2015, despite the release of brick inventory by distributors, while growing house builder activity supported a stronger second half and national brick imports declined significantly over the year.

In the US, revenue climbed 18%, or up 4% at constant exchange rates, due to higher average prices and a “more favourable” product.

At the end of December, net debt fell despite spend on projects during the year and was in line with expectations.

During the year the company continued construction of a new clay brick factory in Leicestershire which will expand its capacity by about 13% and is expected to complete in the second half of the year. Ibstock also installed a new concrete roof tile line at its Leighton Buzzard facility, which started commissioning in August 2016 adding about 5% to capacity.

Meanwhile, price negotiations for 2017 with all the company's UK brick customers has concluded and "are in line with expectations".

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said that “despite a reasonably solid update ahead of full year results” Ibstock was among the biggest fallers on Monday, dropping 3.5%, due to talks of a ‘hard’ Brexit that has undermined confidence in the housing sector. Immediately after the referendum in June 2016, “the sector found itself at the sharp end of the wider sell-off”.

Shares in Ibstock fell 2.95% to 180.70p at 1255 GMT.