TIDMIBST
RNS Number : 9154Z
Ibstock PLC
17 January 2024
17 January 2024
LEI: 2138003QHTNX34CN9V93
Ibstock Plc
Trading Update for the year ended 31 December 2023
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
2023, ahead of full year results, scheduled for Wednesday 6 March
2024.
Resilient performance for the full year
-- Trading in the final quarter in line with our expectations,
underpinned by cost reduction action and stable pricing,
with market conditions remaining subdued
-- Full year revenues expected to have decreased by 21% to approximately
GBP405 million
-- Adjusted EBITDA for the full year expected to be in line
with our previous expectations, reflecting cost and capacity
reduction initiatives and a resilient margin performance
for the year as a whole
Operational Review
-- Comprehensive operational review completed in Q4 to reduce
headcount and align fixed cost base and capacity to near
term demand expectations
-- Annualised benefit of GBP20 million, with around GBP5 million
of this captured in 2023 and the balance to be achieved in
2024
Outlook
-- Residential construction markets expected to remain subdued
in the near-term
-- Robust balance sheet provides significant flexibility and
optionality in respect of future growth investments
-- The Board remains confident in the medium term prospects
for the business, although the pace and timing of the recovery
remain uncertain
Resilient performance in 2023
The Group delivered a resilient performance in the final quarter
of the year, in line with our expectations, despite a continuation
of the weaker market conditions experienced during the third
quarter. Our performance in the final quarter was underpinned by
effective cost reduction action which, in combination with stable
pricing, helped the Group maintain solid margins.
Full year revenues for 2023 are expected to have decreased by
21% to approximately GBP405 million (2022: GBP513 million).
Reflecting the cost and capacity reduction initiatives and the
resilient margin performance for the year as a whole, adjusted
EBITDA is expected to be in line with our previous
expectations.
Operational review
Given the challenging market backdrop, which is expected to
continue into 2024, during the final quarter of the year we
conducted a comprehensive operational review, with the objective of
aligning our fixed cost base and capacity to near term demand
expectations. The consequent restructuring plan included a number
of actions to temporarily reduce capacity across the business, as
well as the permanent closure of our South Holmwood brick factory
in Surrey.
The annualised benefit of this restructuring plan will be GBP20
million, with around GBP5 million of this captured in 2023 and the
balance to be achieved in 2024. The one-off cash cost of the
restructuring programme (including the closure of the Ravenhead
brick factory announced in August) will be around GBP15 million. Of
this, around GBP5 million was paid in 2023, with the remainder
expected to be settled in 2024.
Whilst taking this necessary action, we have been focused on
preserving key skills and knowledge to ensure that the Group
retains the ability to build output back quickly when markets
recover. As part of this review, we have also taken steps to
integrate our core commercial and innovation capabilities, thereby
sharpening our customer proposition and ensuring we go to market in
a more aligned, coordinated way.
Continued strategic progress
The Group has also continued to progress the key projects that
will underpin its growth over the medium term, as the market
recovers.
Commissioning of our new wire-cut brick pathfinder factory at
the Atlas site in the West Midlands commenced on schedule during
the final quarter, and this innovative new manufacturing facility
will begin to supply the UK's lowest carbon bricks to customers
during the first half of 2024. The recent investment programme in
our brick assets will ensure the Group has a lower carbon and more
competitive factory portfolio.
In addition, the Group continued to make good progress with its
ongoing development of the Ibstock Futures business during the
final quarter, with both the facades business, based at our
innovation hub in the West Midlands, and the organic investments in
brick slips capacity at Nostell, West Yorkshire, progressing to
plan.
During the final quarter, the Concrete Division completed the
bolt-on acquisition of Coltman Precast, a manufacturer of
hollowcore flooring, staircases and landings, based in the West
Midlands. This acquisition complements the Division's existing
product offering and will enable Ibstock to offer a full flooring
solution to our customers.
Ongoing financial strength
The Group remains in a strong financial position, with a robust
balance sheet providing significant flexibility and optionality in
respect of future growth investments and capital returns.
Cash flow for the year was in line with our previous
expectations, resulting in net debt ([1]) at 31 December 2023 of
around GBP101 million (December 2022: GBP46 million). During the
year, the Group invested over GBP65 million of fixed capital
including significant investment in growth projects. We also made a
material investment in finished goods inventories, which were
rebuilt from historically low levels during 2023 to ensure we are
well placed as markets recover.
Outlook
Looking ahead, residential construction markets are expected to
remain subdued in the near-term.
Against this backdrop, while the pace of cost inflation has
continued to moderate, it remains a feature, with some modest
year-on-year inflation expected to be largely covered by pricing
action. The Group continues to manage all costs actively.
In 2023 the Group demonstrated its agility in responding to
changing market conditions, while preserving the capability to
react quickly as and when demand improves. With a clear growth
strategy, supported by a strong balance sheet, and with the
fundamental drivers underpinning residential construction market
demand firmly in place, the Board remains confident in the medium
term prospects for the business.
Joe Hudson, CEO of Ibstock PLC, said:
"Against a challenging market backdrop, we are pleased to have
delivered a resilient performance in the final quarter and for the
year as a whole. Throughout the period we have focused on taking
the right actions in light of near term market conditions, which
has led to the difficult but necessary decision to reduce headcount
across the business. At the same time, we have continued to
progress the projects that will underpin growth as our markets
recover.
While the pace and timing of the recovery remain uncertain,
Ibstock is in robust financial health, with the balance sheet
strength and financial flexibility to ensure we remain
well-positioned for a return to growth over the medium term."
- ends -
Enquiries to:
Ibstock plc
Chris McLeish, CFO 01530 261999
Citigate Dewe Rogerson 020 7638 9571
Kevin Smith
Jos Bieneman
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
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.
[1] Net debt is stated on a consistent basis to prior periods,
excluding lease liabilities arising under IFRS16.
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