REG - Ibstock PLC - Trading Update for the year ended 31 December 2024

IbstockAnnouncement

16/01/2025 07:00

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RNS Number : 5049T  Ibstock PLC  16 January 2025

16 January 2025

LEI: 2138003QHTNX34CN9V93

 

Ibstock Plc

 

Trading Update for the year ended 31 December 2024

 

Ibstock Plc ("Ibstock" or the "Group"), a leading UK manufacturer of a diverse
range of building products and solutions, today issues a trading update for
the year ended 31 December 2024, ahead of its full year results, which are
scheduled for Wednesday 5 March 2025.

 

Resilient performance in 2024

 ·   Adjusted EBITDA of c.£79 million, consistent with previous guidance

 

Continued strategic progress

 •    New low carbon capacity in bricks and brick slips systems in place to benefit
      from market recovery; further progress towards our ambitious ESG Strategy

 

Outlook

 •    Expect improved market conditions in 2025, with momentum building through the
      year

 

Resilient performance in 2024

2024 was a challenging year for UK construction markets, with total UK brick
deliveries expected to be over 30% below the 2.5 billion recorded in 2022.
Against this backdrop, the Group extended its resilient performance through
the final quarter of the year, which benefited from our ongoing focus on cost
management and stability in pricing.

 

Full year revenues are expected to have decreased by 10% to approximately
£365 million (2023: £406 million), principally resulting from lower sales
volumes across the core business.  As anticipated at the time of our interim
results in August, the business saw a progressive improvement in sales volumes
across the second half of 2024, with revenues in H2 2024 being 3% ahead of the
prior year period and 6% ahead of H1 2024.

 

Adjusted EBITDA for 2024 is expected to be approximately £79 million, subject
to audit, in line with the guidance provided at the half year. Performance
reflected continued active management of cost and capacity, supported by
sustained discipline on pricing.

 

As announced in October, we took a decision to restructure our Glass Fibre
Reinforced Concrete (GRC) activities, in light of the performance and
near-term prospects for this product line. We anticipate recognising an
exceptional cost of up to £6 million relating to this decision (including
around £1 million of incremental cash costs) in our results for 2024.

 

Continued strategic progress

Despite the challenging market backdrop, the Group continued to invest in
building both capacity and capability in the core business and in Ibstock
Futures during the year, with progress on the key projects that will underpin
our growth over the medium term remaining on track.

 

Production at our new Atlas factory, which produces the UK's first
externally-verified carbon neutral brick, is ramping up well. As our
pathfinder factory, Atlas is piloting a number of new, more sustainable
production technologies and processes that could be rolled out across the
wider factory network to deliver a further significant reduction in carbon
intensity.

We have seen a positive market response to the first phase of our investment
in brick slips capacity at Nostell in Yorkshire, with the factory now ramping
up to deliver a step change in market volumes from 2025.

The integration of Coltman, which is focused on flooring solutions in the UK,
has progressed well and the acquisition is already delivering returns ahead of
our business case. Coltman has strengthened our national footprint as a leader
in this segment.

Ongoing financial strength

Cash flow for the year was in line with our expectations, resulting in net
debt at 31 December 2024 of around £122 million (30 June 2024: £138 million;
31 December 2023: £101 million). During the year, the Group invested c.£45
million of fixed capital, including significant investment in the growth
projects discussed above, providing a strong platform to respond as market
conditions improve.

 

As anticipated, reported leverage(1) reduced during the second half of the
2024 year to 1.8 times, from 2.0 times at the half year.

 

Outlook

 

The government's indicated planning reforms and support for housebuilding are
expected to support a recovery in residential construction activity over time,
albeit planning and affordability remain limiting factors to near-term demand
growth.

Notwithstanding those near term constraints we continue to expect improved
market conditions in 2025, with momentum building through the year. We now
have around 60% of our expected energy requirements covered for the 2025 year,
with cover being front-end loaded. With our capital investment programme now
substantially complete, the Group has lower cost, efficient and more
sustainable capacity in place to respond to an increase in activity as market
conditions improve. In anticipation of this we are incrementally investing to
bring capacity into the network so that we are in a position to respond
dynamically during the year.

Overall, with the benefit of year-on-year volume increases and our robust
operating platform, we expect to make good progress in 2025. Looking further
ahead, the fundamental drivers underpinning demand in our markets are firmly
intact and the Group's medium term prospects remain strong.

 

 

Joe Hudson, CEO of Ibstock PLC, said:

"We are pleased to have delivered a resilient performance, consistent with the
guidance we gave at the half year, in a market where revenues continued to be
impacted by subdued activity levels. This result reflects our active
management of capacity and cost, continued disciplined pricing and a
progressive improvement in demand across the second half, as expected.

 

"Looking to 2025, we expect a further improvement in market volumes to build
through the year. We made good strategic progress during 2024 to add efficient
and sustainable new capacity to our network and we will continue to bring
capacity back into production selectively to support our customers. We see a
significant opportunity for a new era in housebuilding in the UK and with the
investments we have made and our market leadership positions, the Group
remains well placed to support this over the medium term."

 

 

(1)The reported Net debt to EBITDA leverage ratio definition removes the
operating lease expense benefit generated from IFRS16 compared to IAS 17
within EBITDA

 

- ends -

 

Enquiries to:

 

 Ibstock plc
 Chris McLeish, CFO      01530 261999

 Citigate Dewe Rogerson  020 7638 9571
 Kevin Smith

 

About Ibstock Plc

Ibstock Plc is a leading UK manufacturer of a diverse range of building
products and solutions. The Group concentrates on eight core product
categories, each backed up by design and technical services capabilities:

 -  Bricks and Masonry, Façade Systems, Roofing, Flooring and Lintels, Staircase
    and Lift Shafts, Fencing and Landscaping, Retaining Walls and Rail and
    Infrastructure.

The Group comprises two core business divisions, Ibstock Clay and Ibstock
Concrete. The Ibstock Futures business was established in 2021 to accelerate
growth in new, fast developing segments of the UK construction market and,
while it remains in its initial growth phase, forms part of the Clay division.

Ibstock Clay: The leading manufacturer by volume of clay bricks sold in the
United Kingdom. With 14 manufacturing sites, Ibstock Clay has the largest
brick production capacity in the UK. It operates a network of 14 active
quarries located close to its manufacturing plants. Ibstock Kevington provides
masonry and prefabricated component building solutions, operating from 4
sites.

Ibstock Concrete: A leading manufacturer of concrete roofing, walling,
flooring and fencing products, along with lintels and rail &
infrastructure products. The concrete division operates from 13 manufacturing
sites across the UK.

 

Ibstock Futures: Complements the core business divisions by accelerating
diversified growth opportunities which address key construction trends,
including sustainability and the shift towards Modern Methods of Construction
(MMC). Operating from an innovation hub in the West Midlands, and the Nostell
redevelopment in West Yorkshire.

 

Ibstock is headquartered in the village of Ibstock, Leicestershire, with 32
active manufacturing sites across the UK.

 

As a leading building products manufacturer, the Group is committed to the
highest levels of corporate responsibility. The ESG 2030 Strategy sets out a
clear path to address climate change, improve lives and manufacture materials
for life, with an ambitious commitment to reduce carbon emissions by 40% by
2030 and become a net zero operation by 2040.

 

Further information can be found at www.ibstock.co.uk
(http://www.ibstock.co.uk/)

 

Forward-looking statements

 

This announcement contains "forward-looking statements". These forward-looking
statements

include all matters that are not historical facts and include statements
regarding the intentions, beliefs or current expectations of the directors. By
their nature, forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances that are difficult to predict
and outside of the Group's ability to control. Forward-looking statements are
not guarantees of future performance and the actual results of the Group's
operations. Forward-looking statements speak only as of the date of such
statements and, except as required by applicable law, the Group undertakes no
obligation to update or revise publicly any forward-looking statements.

 

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