Ibstock H1 Earnings Call Highlights

Key Points

• First-half performance weakened: Revenue fell 15% to £164.2 million and adjusted EBITDA dropped to £25.7 million, pressured by subdued housing and repair markets, lower volumes, and cost inflation.
• Clay gained market share while concrete struggled: Ibstock’s comparable clay volumes declined less than the broader U.K. market, but concrete revenue and EBITDA fell sharply amid residential-market weakness and factory upgrades.
• Second-half improvement expected, but cautiously: Management expects second-half adjusted EBITDA to exceed the first-half result and leverage to move toward 2x by year-end, while full-year performance is likely to land near the lower end of market expectations.

Ibstock LON: IBST reported lower first-half revenue and earnings as weak housing and repair, maintenance and improvement markets weighed on demand, while the building products group said it expects second-half adjusted EBITDA to exceed the first-half result.

Group revenue for the six months ended June 30 fell 15% to £164.2 million from £193.4 million a year earlier. On a like-for-like basis, excluding the sale of the Forticrete roofing site in late 2025, revenue declined about 10%.

Adjusted EBITDA decreased to £25.7 million from £35.5 million, reflecting lower volumes, reduced fixed-cost absorption from deliberate production and inventory actions, and continued cost inflation. Adjusted earnings per share fell to £0.007 from £0.03. The board proposed an interim dividend of £0.005 per share.

Clay Division Gains Market Share

The company said its clay business delivered a resilient performance despite subdued demand. U.K. domestic brick deliveries declined about 8% year over year during the first five months of 2026, while Ibstock’s comparable clay sales volumes fell about 7%, resulting in a market-share gain.

Clay revenue declined 10% on a reported basis to £119.9 million. Core clay revenue, excluding Ibstock Futures, was down 8% to £118.1 million. Demand for new-build housing and wire-cut bricks was relatively stronger, while soft-mud brick demand remained subdued, particularly in repair and maintenance markets in London and southeast England.

Clay adjusted EBITDA fell to £23.4 million from £32.8 million, with the margin declining to 19.5%. Interim CFO Simon Bedford said lower production and inventory levels created a £5 million to £6 million EBITDA headwind during the half, but described the measures as necessary to align output with demand and manage cash.

Ibstock implemented an annual price increase in February and added a temporary energy and fuel surcharge in June. Management said it did not currently plan additional price increases and expects the surcharge and earlier pricing actions to help offset inflation during the second half.

Concrete Revenue Declines; Investment Continues

Concrete revenue fell 26% on a reported basis to £44.3 million, with the Forticrete disposal accounting for part of the decline. Like-for-like concrete revenue fell about 11% amid weakness in residential and repair and maintenance activity, especially in flooring products.

Infrastructure demand provided partial support, as rail-related sales improved from a low base. Adjusted EBITDA in the concrete business fell to £3.7 million from £6 million, and the division’s margin declined to 8.3%.

The company said upgrades at selected concrete factories temporarily constrained production during the period, but should generate operating and efficiency benefits from the second half onward. It also introduced the Anderton Gen 3 cable trough in June, which received Network Rail approval.

Cash Flow and Leverage

Adjusted free cash flow was an outflow of £22.3 million, compared with an outflow of £9.6 million a year earlier. The result reflected lower EBITDA and a seasonal working-capital outflow of £17.2 million. Inventory increased modestly because trading volumes were softer than anticipated.

Capital expenditure declined to £15.2 million from £20.9 million. Bedford said major organic growth projects are largely complete and that future capital expenditure is expected to be approximately £20 million to £25 million annually, including a modest level of improvement projects.

Net debt stood at £151.3 million at June 30, while net debt-to-EBITDA leverage increased to 2.5 times from 1.9 times a year earlier. The company expects debt and leverage to decline during the second half as cash generation improves, with leverage moving toward two times by year-end. Bedford said this expectation is based on trading assumptions rather than strategic balance-sheet actions.

Growth Projects and Strategic Options

Ibstock said revenue from new and more sustainable products now accounts for about 25% of group revenue. Its Atlas facility is producing 12 products, including the first product from its carbon-neutral range. The company also highlighted its Nostell facility, which is being developed to manufacture ceramic façade products, including IBrick and FastWall systems.

Factory acceptance testing at Nostell is nearing completion, and management said orders for core products are already in the low millions of pounds, with specification inquiries in the tens of millions. The company expects the facility to ramp up over the next several years rather than reach its business-case potential immediately.

The group also identified potential value from its land and clay reserves. It raised its expected proceeds from a land-development and sales program to about £50 million over five years, from a previous estimate of £25 million to £30 million. Management said it did not expect major land-sale proceeds this year but anticipated potential inflows over the next two to three years.

Ibstock is also pursuing commercialization of calcined clay as a lower-carbon cementitious material. An exclusivity period with one counterparty has ended, and the company said it may broaden discussions with alternative potential partners.

Outlook

Management said the Construction Products Association’s forecast for U.K. housing starts has shifted from projected growth of 8% to a forecast decline of 9% for 2026. While infrastructure output is expected to grow at a low single-digit rate, the company said near-term housing and repair-market conditions remain challenging.

Ibstock expects a stronger adjusted EBITDA performance in the second half, supported by customer order intake, modestly better clay volumes, improved concrete performance, increased Ibstock Futures sales and normal seasonal weighting. However, it said full-year performance is anticipated to be around the lower end of current market expectations.

About Ibstock (LON:IBST)

Ibstock plc manufactures and sells clay and concrete building products and solutions to customers in the residential construction sector in the United Kingdom. The company offers bricks and masonry, which includes facing and engineering bricks, brick slips, special shaped bricks, walling stone, architectural masonry, prefabricated components, eco-habitats, and padstones and lintels, as well as façade systems; roofing products comprising roof tiles and accessories, and chimneys; and flooring and lintels, such as beam and block flooring, insulated flooring, hollowcore, and screed rails.

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