Ibstock tumbled on Monday after warning that second-half earnings will come in materially below its previous expectations, as UK brick demand fell sharply in the third quarter and the group cut production to stop unsold stock piling up.
Full-year adjusted EBITDA is now expected to be in the mid-£40 million range.
Ibstock once consistently posted EBITDA above £100m but fell to £71m last year after recording £79m in 2024.
Cracks have been appearing in the UK construction market for some time, but it looks like the market has begun to crumble away in recent months.
Industry data showed UK brick volumes down around 17% year on year across July and August, and conditions stayed weak through September and October.
Ibstock’s own brick sales in the quarter were 22% below its own expectations.
In response, the group ran its plants at about 20% below the production levels set out at the half-year. Lower fixed-cost absorption from that cut is expected to take roughly £6 million off adjusted EBITDA, on top of the hit from lower sales volumes. Overhead and discretionary cost savings will only partly offset the damage.
The board welcomed the government’s Your First Home support scheme as a potentially meaningful boost to affordability and new-build demand. However, it said the scheme’s delay until April 2027 was disappointing and is weighing on near-term demand, as buyers may hold off until it arrives.
Joe Hudson, CEO of Ibstock Plc, said: “Trading conditions deteriorated sharply during the third quarter, with weakness continuing into October. We have responded by reducing production to manage inventory, taking further cost action and maintaining tight control of cash. These production decisions create an additional near-term earnings headwind but are necessary to align output with demand.”
Ibstock shares were down 8.5% at the time of writing on Monday. This one-day move isn’t earth-shattering in itself, but it helps explain why Ibstock is worth less than 25% of its pre-pandemic highs and the challenges the company faces.