Ibstock expects full-year profits to be in the mid-£40m range, well down on analysts’ previous consensus of £59m. Photograph: Ian Nicholson/PAIbstock expects full-year profits to be in the mid-£40m range, well down on analysts’ previous consensus of £59m. Photograph: Ian Nicholson/PAUK’s largest brickmaker hit by sales slump as housebuilding downturn deepensIbstock, which has cut production by a fifth, criticises government for delay in help for housing sector
Sales at the UK’s largest brickmaker plunged by more than a fifth over the summer, as it criticised the government for not introducing fresh help for the housing sector faster.
Leicestershire-based Ibstock said on Monday that sales slumped by 22% below its expectations in the quarter to the end of September, prompting it to slash production levels by a fifth.
Ibstock issued its second profit warning this year and said that UK brick market volumes declined by 17% year on year in July and August, with weak market conditions continuing through September and October.
“Trading conditions deteriorated sharply during the third quarter, with weakness continuing into October,” said Joe Hudson, the chief executive of Ibstock. “We have responded by reducing production to manage inventory, taking further cost action and maintaining tight control of cash. These production decisions create an additional near-term earnings headwind but are necessary to align output with demand.”
The warning by the company, which now expects full-year profits to be “materially below” previous expectations, comes days after the Office for Budget Responsibility cut its forecast for the number of new homes that will be built by 2031 by 190,000.
Angela Rayner, the housing secretary, has admitted there is only a “slim chance” the government will meet its goal of building 1.5m new homes this parliament, amid estimates it could miss the target by a third.
Shares in Ibstock plunged more than 8% as the company also criticised the government’s decision not to start the Your First Home support scheme, which is designed to help first-time buyers in England buy a new-build home with a 2.5% deposit, until next April.
“The introduction of the Your First Home support scheme represents a welcome and potentially meaningful intervention for the UK housing market, with the potential to improve affordability, stimulate new-build demand and strengthen confidence in future housing supply,” the company said. “While the announcement reinforces confidence in the group’s medium-term market outlook, the delay to its introduction until April 2027 is disappointing and has put additional pressure on near-term demand.”
Ibstock said it now expects full-year profits to be in the mid-£40m range, well down on analysts’ previous consensus of £59m.
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The company said its cost savings and cash management initiatives are focused primarily on overhead and discretionary spend.
“Domestically exposed building stocks like Ibstock continue to face very challenging industry conditions,” said Clyde Lewis and Sam Cullen, analysts at Peel Hunt, in a note to investors. “The new Your First Home programme should be modestly helpful next year but lower interest rates remain key to a pickup in sector activity and share prices.”
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