TIDMIBST
RNS Number : 0486N
Ibstock PLC
18 January 2023
18 January 2023
Ibstock plc
Trading Update for the year ended 31 December 2022
Ibstock plc ('Ibstock' or the 'Group'), a leading UK
manufacturer of clay and concrete building products and solutions,
today issues a trading update for the year ended 31 December 2022,
ahead of its full year results, due to be announced on 8 March
2023.
Q4 trading
-- Resilient performance in final quarter of the year driven
by a continued focus on price and margin management and good
operational execution
-- As expected, Q4 sales volumes reduced compared to the prior
year, across both new build and Repairs, Maintenance & Improvement
(RMI) activity
-- Disciplined cost management underpinned a solid EBITDA margin
performance
-- Completed disposal of surplus property in Sussex generated
cash proceeds of GBP8 million, further strengthening the balance
sheet
Strong financial performance in 2022
-- Full year revenues expected to increase by 25% to approximately
GBP510 million (2021: GBP409 million)
-- Adjusted EBITDA expected to be modestly ahead of our previous
expectations
-- Cash generation ahead of our previous expectations, resulting
in net debt [1] at 31 December 2022 of around GBP46 million
(December 2021: GBP39 million) after growth capital investments
of over GBP35 million and GBP30 million share buyback
Outlook
-- Growth investments at Atlas and Aldridge (wire cut factories
in the West Midlands) are on track, delivering the UK's first
net zero [2] bricks from the end of this year
-- Ibstock Futures continues to develop brick slips strategy;
initial investment of GBP8 million in 2023 in automated line
to accelerate our slips network capacity build ahead of Nostell
factory being developed
-- Whilst we continue to expect conditions in 2023 to be more
challenging than 2022, we are increasingly well positioned
to capitalise on market opportunities and remain confident
in our ability to deliver against our ambitious medium-term
financial targets
Joe Hudson, CEO of Ibstock PLC, said:
"The business delivered a resilient performance in the final
quarter of 2022, despite, as expected, lower sales volumes across
both new build and RMI markets reflecting a more cautious demand
environment . A continued disciplined focus on cost management,
alongside our dynamic commercial approach, underpinned a solid
margin performance in Q4 and resulted in adjusted EBITDA for 2022
that was modestly ahead of our previous expectations.
"The strong performance achieved in 2022 reflects the strategic
progress we have made as a business over recent years. Our balance
sheet is strong, we continue to make good progress towards our
ambitious 2030 ESG targets, and our growth investments in both the
core business and Ibstock Futures are progressing well. We are
particularly excited about the prospect of producing the UK's first
net zero(2) carbon brick at our redeveloped Atlas factory before
the end of this year.
"Whilst in the short-term we expect market conditions to be more
challenging, we remain well positioned to deliver strong growth
over the medium-term."
Trading performance
The Group delivered a resilient trading performance in the final
quarter of the year, with a continued focus on margin management
and strong operational execution. As expected, sales volumes in the
final quarter reduced compared to the comparative period. We
continued to price dynamically to recover significant cost
inflation, which, combined with disciplined management of cost,
helped ensure a solid margin performance. Revenues for the full
year were approximately GBP510 million, an increase of around 25%
compared to 2021.
Given the resilient trading performance in Q4, the Group expects
to report adjusted EBITDA for 2022 modestly ahead of its previous
expectations.
Ibstock Futures
We have continued to make good progress in developing the
Ibstock Futures business during the final quarter, with integration
of our acquired businesses progressing well and further development
of our sustainability initiatives to use existing clay reserves to
manufacture cementitious replacements.
We have also continued to develop the brick slip investment
strategy and identified opportunities to re-configure the project,
to both accelerate commissioning of an initial capacity extension,
and incorporate more advanced and efficient process technology into
the purpose built factory at Nostell. As part of this, we initiated
an investment of up to GBP8 million, in Q4 2022, on an automated
slip line, providing capacity for up to 17 million slips and coming
on stream within 12 months. At this stage, commissioning for the
main line is expected in late 2024 .
Financial position
Cash flow performance for the year was ahead of our
expectations, with closing net debt(1) of approximately GBP46
million (31 December 2021: GBP39 million), after growth capital
investments of over GBP35 million (over and above our normal
sustaining capital expenditure) and our GBP30 million share
buyback. Cash flow benefited from the strong trading performance
and a tight focus on cost and working capital management, as well
as reduced initial investment at Nostell in the year.
Closing net debt(1) also benefited from the sale of surplus land
at West Hoathly, Sussex, during the final quarter of the year, for
cash proceeds of GBP8 million. The clay factory on this site closed
as part of the 2020 restructuring programme. The profit on disposal
arising from this transaction will be treated as exceptional and
therefore outside the Group's adjusted earnings for the 2022
year.
During the final quarter of 2022, the Group agreed a buy-in
transaction for the main defined benefit pension scheme, involving
the purchase of an insurance contract with a specialist pensions
provider covering all remaining pension liabilities. This
transaction, which is expected to conclude during the 2023
financial year, represents a significant further step in removing
pensions risk from the Group's balance sheet.
During the final quarter of 2022, we also concluded a 12-month
extension to our GBP125 million Revolving Credit Facility (RCF),
extending maturity to November 2026 on similar terms to the
original agreement.
Outlook
Our balance sheet remains strong, and our growth investments in
both the core business and Ibstock Futures are progressing
well.
As we look forward, higher interest rates, inflation and
heightened market uncertainty are expected to impact the demand
picture in 2023. However, whilst in the short-term we expect market
conditions to be more challenging, we are increasingly well
positioned to capitalise on opportunities across diversified
construction markets and remain confident in our ability to deliver
against our ambitious medium-term financial targets.
- ends -
Enquiries to:
Ibstock plc
Chris McLeish, CFO 01530 261999
Citigate Dewe Rogerson 020 7638 9571
Kevin Smith
Holly Gillis
About Ibstock Plc
Ibstock plc is a leading UK manufacturer of clay and concrete
building products and solutions. Its principal products are clay
bricks, brick components, concrete roof tiles, concrete substitutes
for stone masonry, concrete fencing and pre--stressed concrete
products.
The Group's core two divisions are:
Ibstock Clay: The leading manufacturer by volume of clay bricks
sold in the United Kingdom. With 16 manufacturing sites Ibstock
Brick has the largest brick production capacity in the United
Kingdom. It operates a network of 19 active quarries located close
to its manufacturing plants. Ibstock Kevington provides masonry and
pre-fabricated component building solutions, operating from 6 sites
across the United Kingdom.
Ibstock Concrete: A leading manufacturer of concrete roofing,
walling, flooring and fencing products, along with lintels and
general concrete building products, with 14 manufacturing plants in
the United Kingdom.
Forward-looking statements
This announcement contains "forward-looking statements". These
forward-looking statements include all matters that are not
historical facts and include statements regarding the intentions,
beliefs or current expectations of the directors. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances that are difficult
to predict and outside of the Group's ability to control.
Forward-looking statements are not guarantees of future performance
and the actual results of the Group's operations. Forward-looking
statements speak only as of the date of such statements and, except
as required by applicable law, the Group undertakes no obligation
to update or revise publicly any forward-looking statements.
[1] Net debt is stated on a consistent basis to prior periods,
excluding lease liabilities arising under IFRS16.
[2] Scope 1 and 2 carbon emissions
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