Ibstock gives cautious outlook amid subdued construction market

(Sharecast News) - Ibstock said on Wednesday that full-year earnings were expected to come in around the lower end of market forecasts, as weak UK construction activity weighed on its first-half performance.

The building-products manufacturer continued to expect adjusted EBITDA to be stronger in the second half than in the first, but warned that private housebuilding and repair, maintenance and improvement activity were likely to remain challenging in the near term.

The company highlighted "renewed uncertainty around the Middle East conflict coupled with a changing UK political backdrop", which could have an impact on consumer confidence and the wider construction sector in the near term.

Revenue for the six months ended 30 June fell 15.1% to �164m, or 10% on a like-for-like basis, while adjusted EBITDA declined 27.6% to �26m. The adjusted EBITDA margin contracted by 270 basis points to 15.7%.

Ibstock reported a statutory pre-tax loss of �27m, compared with a profit of �8m a year earlier, after taking a �25m non-cash impairment charge against mothballed soft-mud facilities.

Adjusted earnings per share fell to 0.7p from 3.0p, while the interim dividend was cut to 0.5p from 1.5p.

Clay brick revenue declined 8% to �118m, although the company said its volumes had fallen by less than the wider market, resulting in increased domestic market share. Concrete revenue was down 11% on a like-for-like basis to �44m.

Net debt increased to �151m from �145m, with leverage rising to 2.5 times from 1.9 times previously, although Ibstock expects leverage to fall towards two times by year-end.

At 0931 BST, Ibstock shares were down 2.4% at 95.45p.

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