Ibstock revenues rise amid tough pricing market

(Sharecast News) - Brick maker Ibstock said it expected second half profits to be ahead of last year as it reported a rise in interim revenues amid signs of growth in its key markets, although competition kept a lid on prices. Group revenues increased 9% to £193m, driven by significant volume growth in the clay unit, where revenue increased by 12% to £134m. Adjusted earnings before, interest, tax, depreciation and amortisation fell £5.8% to 36m.

Ibstock said pricing progression in the six months to June was modest, reflecting a competitive market backdrop, The clay division experienced a negative mix impact, "as a result of the relatively stronger growth in new-build residential markets".

It now expects adjusted EBITDA in the second half to be ahead of last year and held full year forecasts of £77m - £82m.

"The new-build residential market showed encouraging signs of recovery in the first half of the year, but activity is still well below normalised levels," said chief executive Joe Hudson.

"Pricing progression in the first half of 2025 was modest, reflecting a competitive market backdrop in some areas of the market, meaning we were not able to fully recover cost inflation in the period. We also experienced a negative impact of sales mix, as a result of relatively stronger growth in new-build residential construction."

"As we plan for a period of further market growth, we have invested in restoring core capacity to meet demand. Whilst this has impacted margins in the first half, it will ensure we are able to benefit fully from the recovery as the market progresses."

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said expectations were buoyed further by market forecasts of further interest rate cuts through the rest of 2025 and beyond, "which should improve mortgage affordability and drive further uplifts in demand for Ibstock's products".

"To prepare for this potential uplift, Ibstock is starting to bring more capacity online and now has the largest brick-making capacity in the UK. However, due to the high fixed costs associated with firing up the brick-making kilns, margins have come under pressure."

"Until demand ramps up further, operations won't be as efficient as investors would like, and profitability will remain hamstrung. In the meantime, cash flows and investor returns will likely remain in the back seat."

Reporting by Frank Prenesti for Sharecast.com