REG - Brickability Group - Trading Update

BrickabilityAnnouncement

27/02/2024 07:00

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RNS Number : 5224E  Brickability Group PLC  27 February 2024

27 February 2024

 

Brickability Group plc

 

("Brickability" or the "Group")

 

Trading Update

 

Resilient performance; further progress on strategic objectives

 

Brickability Group plc (AIM: BRCK), the leading construction materials
distributor, today provides an update on recent trading and in respect of the
financial year ending 31 March 2024 ("FY24").

 

Trading update

Against a challenging trading backdrop, the Group is continuing to demonstrate
its resilience through growing diversification, with good performances in both
the Distribution and Contracting Divisions partly offsetting tougher
comparators in Bricks and associated building products.

 

Market volumes for bricks in the UK have been significantly lower in the last
twelve months, with UK despatches for the calendar year 2023 approximately 30%
lower than 2022. Over the same period, brick imports into the UK are estimated
to have fallen by 42%. FY24 Group sales volumes in the Bricks and Importing
Divisions reflect these market trends, with FY24 revenues year-to-date at
lower levels than in the prior year. Pricing is becoming increasingly
competitive given the softer demand.

 

However, the Distribution Division has traded well despite the slowing of
private housebuilding and residential RMI markets, and gross margins have
remained strong. Upowa remains well placed to benefit from further regulatory
drivers in new build housing and the increasing demand for more sustainable
and zero-carbon technology solutions.

 

The Contracting Division also continues to perform well; the integration of
the recent acquisitions of Topek Holdings Limited and TSL Assets Limited is
underway, and both companies are experiencing increased levels of enquiries as
part of the enlarged Group.

 

Outlook

The lower levels of demand in Bricks and associated building products
experienced year-to-date are likely to persist through to the end of the
current financial year, and accordingly, the Group's FY24 adjusted EBITDA is
expected to be towards the lower end of current market expectations.(1)

 

Whilst it is encouraging that the rate of inflation is trending down
favourably and the widely expected fall in interest rates will benefit the
wider market, trading conditions are expected to remain challenging for longer
than initially anticipated.

 

As a result, the Board now considers it appropriate to assume a more
conservative profile for the Group's recovery over the next twelve months. The
underlying long-term demand for UK housing remains robust, and the Group is
well placed to benefit significantly as the market and volumes recover.

 

Alan Simpson, Chief Executive Officer, said:

 

"I am extremely pleased with the performance of the Group and of its
employees, given the continuing challenging market conditions outside of our
control. The short-term factors impacting our businesses are well publicised,
however, we are very excited by some of the opportunities we are seeing in the
market.

 

"We continue to make further progress on our strategy, which includes
diversifying the Group through differentiated product offerings and acquiring
higher margin revenue streams, the benefits of which we are already seeing.
The two recent acquisitions demonstrate our ability to identify and execute
quality acquisitions, whilst maintaining a robust balance sheet.

 

"We have maintained a disciplined approach to cost and cash management during
this period, and I am confident the Group is extremely well positioned across
each of its divisions to benefit when activity in its end markets recover."

 

(1) Complied analyst consensus for the Company, prior to this announcement, is
for FY24 adjusted EBITDA of £46.2m with a range of £44.8m to £47.2m.

 

For further information please contact:

 

 Brickability Group plc                                           via Montfort Communications

 John Richards, Chairman

 Alan Simpson, Chief Executive Officer

 Mike Gant, Chief Financial Officer

 Cavendish Capital Markets (Nominated Adviser and Broker)         +44 (0) 207 220 0500

 Ben Jeynes, George Lawson (Corporate Finance)

 Julian Morse, Michael Johnson, Charlie Combe (Sales & ECM)

 Montfort Communications                                           +44 (0) 203 514 0897

 James Olley                                                      brickability@montfort.london (mailto:brickability@montfort.london)

 Ella Henderson

 

About Brickability

Brickability is a leading construction materials distributor, serving
customers across the UK and Europe for over 37 years through its national and
local networks. The Group operates from more than 70 locations across the
country with over 700 employees.

 

 

 

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