TIDMIBST
RNS Number : 4001D
Ibstock PLC
28 October 2020
28 October 2020
Ibstock plc
Trading Update
Ibstock plc ('Ibstock' or the 'Group'), a leading manufacturer
of clay bricks and concrete products in the United Kingdom, today
issues a trading update for the period to 30 September 2020.
Trading performance and outlook
The Group saw continuing recovery in demand in the period, with
trading conditions improving steadily across the third quarter.
Activity levels in our Repair, Maintenance and Improvement (RMI)
markets and merchant channels remained robust and we benefitted
from improving volumes to our housebuilding customers as activity
in the new build housing segment increased.
Both our Clay and Concrete businesses benefited from these
improving conditions, with overall Group volumes recovering to
around 90% of prior year levels in the month of September and
remaining at these levels during the month of October. Group
revenues for the three months to 30 September 2020 were 88% of
those in the comparative prior year period.
As volumes have continued to improve, the benefit of the cost
and capacity actions taken since the start of the second quarter
have resulted in an encouraging recovery in margins across both
businesses which are trending towards pre-COVID-19 levels on a run
rate basis.
We have continued to operate our manufacturing sites in line
with the recovery in customer demand and to ensure we have capacity
in place to deliver on our volume expectations for the final
quarter. As has been the priority since the onset of the pandemic,
this has been done whilst ensuring the health and safety of our
colleagues, with revised working protocols, including social
distancing measures and onsite temperature checks, in place at all
of the Group's locations.
The Group exited the third quarter with good momentum and
current trading performance is ahead of our previous internal base
case for the full year. Subject to there being no further material
disruption in the balance of the year, the Board expects adjusted
EBITDA for the 2020 financial year to be approximately GBP50
million.
Focus on maintaining strategic progress
Having executed an effective operational and financial response
to the unprecedented disruption experienced across our business and
markets in the second quarter, the sustained recovery in activity
levels through the third quarter has enabled us to increase our
focus on the initiatives that will support our long term strategic
objectives.
As we addressed the issues arising from the pandemic we also
decided to extend the programme of measures to improve the
flexibility and cost competitiveness of the Group's manufacturing
base, with the restructuring of operations, first announced in
early June, expected to substantially complete by the end of the
year. These actions are expected to result in a material structural
reduction in our fixed cost base, delivering up to GBP20 million of
annual cost savings in 2021. Whilst this will enable us to optimise
returns should volumes remain below pre-COVID-19 levels, we have
also retained the flexibility to respond quickly to scale up
production as demand improves.
The Group continues to manage cash closely and remains in a
robust financial position. We anticipate a reduction in net debt by
the end of the year, compared to the GBP103 million reported as at
the half year end, ensuring significant headroom under our GBP215
million revolving credit facility, which expires in March 2022, and
against our renegotiated covenants. The inherent returns and cash
generation capability of the business, enhanced by the cost actions
taken, should enable the Group to de-lever quickly in 2021 assuming
demand conditions remain broadly stable, enabling us to continue to
deliver shareholder returns and invest in the Group's long term
growth strategy, in line with our capital allocation
priorities.
Pensions
During the third quarter, the Ibstock plc Pension Scheme
completed a partial buy-in transaction with a specialist
third-party provider. This transaction, which insures just over
half of the Group's defined benefit liability, represents a
significant step in the Group's continuing strategy of de-risking
its pensions exposure.
Joe Hudson, Chief Executive Officer of Ibstock plc,
commented:
"We are encouraged by the continued recovery in demand seen in
the third quarter in both our Clay and Concrete businesses,
although we remain mindful that there is significant uncertainty in
the period ahead.
"We remain confident in the recovery of our markets over time
and that the actions we have taken in the business leave us both
with the necessary flexibility to meet current challenges and an
organisation well positioned to take full advantage of future
opportunities."
-Ends-
Enquiries to:
Ibstock plc
Chris McLeish, CFO 01530 261999
Citigate Dewe Rogerson 020 7638 9571
Kevin Smith
Nick Hayns
About Ibstock Plc
Ibstock plc is a leading manufacturer of clay bricks and a
diversified range of clay and concrete products, from its
operations in the United Kingdom. Its principal products are clay
bricks, brick components, concrete roof tiles, concrete substitutes
for stone masonry, concrete fencing and pre--stressed concrete
products.
The Group's two divisions are:
Ibstock Clay: The leading manufacturer by volume of clay bricks
sold in the United Kingdom. With 19 manufacturing sites Ibstock
Brick has the largest brick production capacity in the United
Kingdom. It operates a network of 23 active quarries located close
to its manufacturing plants. Ibstock Kevington provides masonry and
pre-fabricated component building solutions, operating from 5 sites
across the UK.
Ibstock Concrete: A leading manufacturer of concrete roofing,
walling, flooring and fencing products, along with lintels and
general concrete building products, with 15 manufacturing plants in
the United Kingdom.
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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END
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