Key facts
- Ibstock said UK brick market volumes fell 17% year on year in July and August, with weakness continuing into October.
- Ibstock said the delay of the Your First Home scheme until April 2027 has put additional pressure on near-term demand.
- Ibstock said its cost savings focus on overhead and discretionary spend.
- Peel Hunt analysts Clyde Lewis and Sam Cullen said lower interest rates remain key to a pickup in sector activity.
Ibstock, the UK's largest brickmaker, said on Monday that sales in the quarter to the end of September ran 22% below its expectations, and it cut production by a fifth to manage inventory. The Leicestershire-based company issued its second profit warning of the year and said it now expects full-year profit in the mid-£40m range, well below an analysts' consensus of £59m. Shares in Ibstock fell more than 8%.
Ibstock said UK brick market volumes declined 17% year on year in July and August, with weak conditions continuing through September and October. Chief executive Joe Hudson said trading conditions deteriorated sharply in the third quarter and that the production decisions create an additional near-term earnings headwind but are necessary to align output with demand. The company said its cost savings and cash management focus primarily on overhead and discretionary spend.
The warning came days after the Office for Budget Responsibility cut its forecast for the number of new homes built by 2031 by 190,000. Housing secretary Angela Rayner has said there is only a slim chance the government meets its goal of building 1.5m new homes this parliament. Ibstock said the government's Your First Home support scheme, which helps first-time buyers in England buy a new-build home with a 2.5% deposit, is a welcome intervention, but it called the delay to its introduction until April 2027 disappointing and said it has put additional pressure on near-term demand.
Peel Hunt analysts Clyde Lewis and Sam Cullen said in a note to investors that domestically exposed building stocks like Ibstock continue to face very challenging industry conditions, and that lower interest rates remain key to a pickup in sector activity and share prices.