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© Ibstock Plc. 2024
Ibstock Plc Interim Results Statement - 6 months to 30 June 2024
Continued strategic progress; well-placed for the market recovery
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 2024.
Statutory Results
Six months ended 30 June | 2024 | 2023 | Change | % |
|---|---|---|---|---|
Revenue | £178m | £223m | (£45)m | (20)% |
Profit before taxation | £12m | £30m | (£18)m | (60)% |
EPS | 2.2p | 5.7p | (3.5)p | (61)% |
Interim dividend per share | 1.5p | 3.4p | 1.9p | (56)% |
Adjusted Results1
Six months ended 30 June | 2024 | 2023 | Change | % |
|---|---|---|---|---|
Adjusted EBITDA | £38m | £63m | (£25)m | (40)% |
Adjusted EBITDA margin | 21.2% | 28.2% | (700)bps | (25)% |
Adjusted EPS | 3.5p | 9.0p | (5.5)p | (61)% |
Adjusted free cashflow | (£15)m | (£22)m | +£7m | 28% |
ROCE | 8.0% | 19.6% | (11.6)ppts | (59)% |
Net debt | £138m | £89m | £49m higher | (55)% |
Solid financial performance
- Solid first half performance against the backdrop of continued challenging market conditions, with adjusted EBITDA1 for the period in line with our expectations
- Revenues reduced by 20% to £178 million (2023: £223 million) principally resulting from lower sales volumes across the core business. Sales volumes reflected lower market demand and our disciplined approach to pricing, compounded by exceptionally wet weather in the early part of the period
- Statutory profit before tax of £12 million (2023: £30 million) principally reflected lower operating profit compared to the comparative period 2
- Adjusted EBITDA1 was £38 million (2023: £63 million) reflecting lower sales volumes and the impact of the additional fixed cost carried during the period to preserve productive capacity. The prior period saw a £10 million benefit from the absorption of fixed costs into finished goods inventories
- Major capital investment projects now close to completion, with capacity in place for the market recovery
- Maintained focus on cash management, with tight control of capital expenditure, costs and working capital. Net debt1 at 30 June 2024 was £138 million (June 2023: £89 million), representing leverage of 2.0x (2023: 0.7x)
- Interim dividend of 1.5p per share (2023: 3.4p)
Continued strong cost focus, while preserving capability
- In light of weaker market demand, the Group continued to manage costs effectively in the period to protect in-year performance, achieving a run-rate fixed cost reduction benefit during the first half in excess of the £20 million per annum target announced in March 2024
- These incremental actions will not compromise our ability to build back capacity quickly as markets recover
- Having managed the balance sheet effectively through this period of market weakness, the strong cash generation profile of the business will provide additional scope for investment in opportunities to accelerate performance as conditions improve.
Further strategic progress as we continue to invest in our future growth
- The fundamental drivers underpinning medium-term demand in our markets remain firmly in place, and we are building new capabilities in both conventional and diversified markets
- Recent investments at Aldridge and Parkhouse brick factories now delivering efficient, sustainable capacity
- Commissioning of new Atlas brick factory well advanced. Once operating at full capacity, our upgraded clay factory network will be capable of operating at roughly double the levels of brick output produced over the last 12 months
- Continued development of Ibstock Futures, with first phase of brick slip investment at Nostell, West Yorkshire now largely complete
Current trading and outlook
- The new government’s focus on accelerating the delivery of new housing and infrastructure is expected to form a more positive backdrop for housing industry supply chains and effective demand over the medium term
- We are encouraged by signs of an improving trend in sector lead indicators. Whilst we remain cautious about the extent to which this will translate into improvements in market demand during the latter part of the year, we expect adjusted EBITDA for the second half of the 2024 year to be broadly in line with the comparative period in 2023²
- The Group remains focused on taking action to respond to prevailing market conditions and we will continue to manage our cost position carefully, balancing stock levels with further investments in cost and capacity to match market demand
- We expect second half cash flow to be positive, with reported leverage reducing from 2.0x at 30 June 2024 towards the top end of our target range (of 0.5 times to 1.5 times) by year end. Given the inherently cash generative nature of our business, we would expect reported leverage to revert to within our target range thereafter.
- The Group continues to build a strong position in diversified construction markets through Ibstock Futures, and will bring to market the first brick slips from our Nostell factory during the second half of this year, with the larger automated slip systems factory on track to commission by the end of 2025
- With lower cost, efficient and more sustainable capacity in place in the core business, and with inventory levels rebuilt, the Group is well positioned to serve customers and respond to an increase in activity as market conditions improve.
Joe Hudson, Chief Executive Officer, commented:
“Market conditions remained challenging in the first half, as expected, with sales volumes below those reported in the comparative period. We delivered a solid profit performance for the period which reflected our ongoing focus on the active management of cost and margin.
“Lead indicators point to an improving sector picture, and although we are taking a cautious view of the extent to which this will translate into a demand improvement in the balance of the year, we expect adjusted EBITDA for the second half of the 2024 year to be broadly in line with the comparative period in 2023.
“The new government’s commitment to increasing the supply of new homes creates a more positive backdrop for medium term demand, and the Group remains well-positioned for market recovery. Our investments over the last few years have added high quality, lower cost, efficient and more sustainable capacity to our network and developed new capabilities for the group in diversified construction markets, while also creating a leaner, more customer-focused business. We believe this will be a powerful combination as market conditions improve.
“The fundamental drivers underpinning demand in our markets are firmly in place and our prospects remain strong, underpinned by our robust balance sheet.”
View the full statement, presentation & webcast on our Reports & Presentations webpage
1Alternative performance measures are described in Note 3 to the interim financial statements.
2The Group reported Adjusted EBITDA of £44 million for the 6 months ended 31 December 2023
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