Ibstock Plc Interim Results Statement - 6 months to 30 June 2023

02 Aug 2023

Resilient first half performance underpins confidence in full year expectations

Ibstock Plc ("Ibstock" or the "Group"), a leading UK manufacturer of a diverse range of building products and solutions, announces results for the six months ended 30 June 2023.

Statutory Results

Six months ended 30 June	2023	2022	∆ 1Y	% change
Revenue	£223m	£259m	(£36)m	(14)%
Profit before taxation	£30m	£51m	(£21)m	(42)%
EPS	5.7p	10.0p	(4.3)p	(43)%

Adjusted Results¹

Six months ended 30 June	2023	2022	∆ 1Y	% change
Adjusted EBITDA	£63m	£71m	(£8)m	(11)%
Adjusted EBITDA margin	28.2%	27.3%	+90bps	+3%
Adjusted EPS	9.0p	11.3p	(2.3)p	(20)%
Interim dividend per share	3.4p	3.3p	+0.1p	+3%
Adjusted free cashflow	(£22)m	£30m	(£52)m	>(100)%
ROCE	19.6%	19.8%	(20)bps	(1)%
Net debt	£89m	£36m	£53m higher	>(100)%

Resilience and financial strength

Resilient trading performance in the first half year with performance marginally ahead of the Board’s expectations.
Revenue down 14% to £223 million (2022: £259 million) reflecting reduced activity levels in our residential markets. Despite this more subdued market backdrop, selling prices remained firm.
Adjusted EBITDA1 was £63 million (2022: £71 million), reflecting disciplined approach to pricing, an intense focus on cost and capacity management, and the benefit of fixed cost absorption through inventory build.
Continued operational and strategic progress in our diversified growth engine, Ibstock Futures; new innovation hub in West Midlands now operational, creating a scalable platform for growth.
Statutory Profit before tax of £30 million (2022: £51 million) reflects exceptional cost1 of around £11 million arising from potential clay site closure (including £1.5m cash cost)
Balance sheet remains strong with leverage of 0.7x (2022: 0.3x), towards the lower end of the target range, and period end net debt was better than our expectations at £89 million (2022: £36 million).
Interim dividend up 3% to 3.4 pence per share (2022: 3.3p), reflecting the resilient trading performance and the Board’s confidence in the Group’s prospects.

Investing in future growth

Progress on all key growth projects remains on budget and schedule.
Brick slips investments at Nostell, West Yorkshire, progressing to plan, with automated slips line (17 million slips p.a.) to commission from the end of 2023; construction of larger slips systems factory (30 million slips p.a. from the end of 2024) now well underway, creating a strong, diversified position in this fast-growing product category.
Continued development of Clay brick factory network to create low cost, efficient and sustainable capacity in line with our medium-term growth objectives. Redevelopment of wire cut brick factories in the West Midlands (Atlas/Aldridge) remain on track to commission from the end of 2023. Atlas will produce the UK’s first externally verified carbon neutral brick and will increase annual network capacity by over 100 million bricks to support our long-term growth. The project is a ‘pathfinder’ for more sustainable manufacturing processes to be scaled across the Group-wide estate on our journey to net zero.

Against the current backdrop of reduced demand and with industry capacity increasing in 2024, we have announced a proposal to close our higher-cost Ravenhead wire-cut brick factory in North West England. Subject to consultation, closure would reduce the Group’s current clay brick network capacity by around 40 million bricks.

Current trading and outlook

While overall sales volumes were down significantly in the first half, demand showed improvement across the period.
Our investment in major growth projects remains on track and the Group continues to drive strategic progress while remaining intensely focused on managing costs and capacity, with a range of measures in place, in light of reduced market demand.
Balance sheet strength provides resilience and gives optionality on investment and shareholder returns.
While recent macroeconomic events have introduced greater uncertainty into the outlook, we remain confident in our ability to respond to market conditions and the Board’s expectations for the full year are unchanged.
We are confident in the medium term outlook, and remain committed to our medium term financial targets.

Joe Hudson, Chief Executive Officer, commented:

“Our first half performance demonstrates our resilience in a subdued market environment, with lower customer demand across both new build and RMI segments. Our focus on customer service and commercial execution, coupled with disciplined management of capacity and costs, has enabled us to deliver a result marginally ahead of our expectations, despite more challenging trading conditions.

“We have continued to make strong progress with our strategic investment plans that will underpin Ibstock’s future growth and enhance our industry leadership position. By focusing on expansion, diversification and innovation we are building new capabilities in faster and sustainability-led growth segments of the UK construction market.

“Although overall sales volumes were down significantly in the first half, demand showed improvement across the period. Whilst recent macroeconomic developments have created increased uncertainty in the outlook, having performed marginally ahead of our expectations during the first half we remain confident in our ability to respond to market conditions in the balance of the year and the Board’s expectations for the full year are unchanged.”

View the full statement, presentation & webcast on our Reports & Presentations webpage

¹Alternative Performance measures are described in Note 3 to this results announcement