Ibstock beats expectations despite housebuilding slowdown

Ibstock’s profits slumped in the first half, but the materials group still beat expectations amid a building slowdown.

The FTSE 250 group’s revenue declined by 14 per cent year-on-year to £223million for the first six months to 30 June, with Ibstock citing ‘reduced activity levels in [its] residential markets’.

The manufacturer also saw its adjusted earnings before nasties fall 11 per cent to £63million over the same time period, but this was still ‘marginally ahead of expectations’.

The Leicestershire-based business also revealed that pre-tax profit was down by from £51million to £30million over the same period.

Ibstock’s shares were up 6.5 per cent to 161.8p in morning trading on Tuesday. 

CEO of Ibstock Joe Hudson said that while  sales volumes were ‘down significantly’ in the first half, ‘demand showed improvement across the period’. 

Hudson added: ‘Our first half performance demonstrates our resilience in a subdued market environment, with lower customer demand across both new build and RMI segments. 

‘Our focus on customer service and commercial execution, coupled with disciplined management of capacity and costs, has enabled us to deliver a result marginally ahead of our expectations, despite more challenging trading conditions.

Competitors Travis Perkins and SIG have also been hit by the building slowdown.

Travis Perkins said this week that it expects adjusted operating profits, which shrunk by 31 per cent in the first half, of about £240million for the full year, compared to £295million in 2022.

SIG also warned that profits are set to come in at the lower end of forecasts, amid ailing demand across Europe and a spike in operating costs. 

Housebuilder Taylor Wimpey today warned that higher mortgage rates are weighing on potential customers’ ability to afford to buy new homes.

The group was hit by a sharper increase in mortgage costs in June after the Bank of England increased the base interest rate from 4.5 per cent to 5 per cent.

On Thursday, the Bank of England is expected to announce its 14th interest rate increase in a row as it battles to bring inflation down. Many analysts expect interest rates to be upped to 5.25 per cent, with further rises expected in the coming months.

On Tuesday, data from Moneyfacts revealed that the average two-year fixed mortgage deal was 6.85 per cent, while the average five-year fixed deal was 6.37 per cent.

Hudson added: ‘We have continued to make strong progress with our strategic investment plans that will underpin Ibstock’s future growth and enhance our industry leadership position. 

‘By focusing on expansion, diversification and innovation we are building new capabilities in faster and sustainability-led growth segments of the UK construction market.

‘Whilst recent macroeconomic developments have created increased uncertainty in the outlook, having performed marginally ahead of our expectations during the first half we remain confident in our ability to respond to market conditions in the balance of the year and the board’s expectations for the full year are unchanged.’