Sales at the UK’s largest brickmaker plunged by more than a fifth over the summer, as it criticised the government for not introducing fresh help for the housing sector faster.
Leicestershire-based Ibstock said on Monday that sales slumped by ۲۲% below its expectations in the three months to the end of September, prompting it to slash production levels by a fifth.
Ibstock issued its second profit warning this year and said UK brick market volumes declined by ۱۷% year on year in July and August, with weak market conditions continuing through September and October.
“Trading conditions deteriorated sharply during the third quarter, with weakness continuing into October,” said Joe Hudson, the chief executive of Ibstock. “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.”
The warning by the company, which now expects full-year profits to be “materially below” previous expectations, comes days after the Office for Budget Responsibility cut its forecast for the number of new homes that will be built by ۲۰۳۱ by ۱۹۰,۰۰۰.
Angela Rayner, the housing secretary, has said there is only a “slim chance” the government will meet its goal of building ۱.۵m new homes this parliament, amid estimates that the target could be missed by a third.
Shares in Ibstock fell as much as ۱۳%, making it the biggest faller on the London stock market on Monday. The company’s market value has halved over the last year to £۲۷۷m.
Ibstock also criticised the government’s decision to delay the start of a support scheme that is designed to help first-time buyers in England buy a newbuild home with a ۲.۵% deposit.
“The introduction of the Your First Home support scheme represents a welcome and potentially meaningful intervention for the UK housing market, with the potential to improve affordability, stimulate new-build demand and strengthen confidence in future housing supply,” the company said. “While the announcement reinforces confidence in the group’s medium-term market outlook, the delay to its introduction until April ۲۰۲۷ is disappointing and has put additional pressure on near-term demand.”
Ibstock said it now expected full-year profits to be in the mid-£۴۰m range, well down on analysts’ previous consensus of £۵۹m.
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The company said its cost savings and cash management initiatives were focused primarily on overhead and discretionary spend.
“Domestically exposed building stocks like Ibstock continue to face very challenging industry conditions,” said Clyde Lewis and Sam Cullen, analysts at Peel Hunt, in a note to investors. “The new Your First Home programme should be modestly helpful next year but lower interest rates remain key to a pickup in sector activity and share prices.”
