Ibstock Plc, the Leicestershire-based manufacturer of building products and solutions, has issued a trading update for the year ended 31 December 2023, in which the firm has revealed the closure of its South Holmwood brick factory.
In the update the business said it had delivered a resilient performance in its final quarter, in line with expectations, despite a continuation of weaker market conditions. Ibstock noted the performance in the final quarter was underpinned by “effective cost reduction action which, in combination with stable pricing, helped the Group maintain solid margins.”
Full year revenues for 2023 are expected to have decreased by 21% to approximately £405 million (down from £513 million for 2022), while adjusted EBITDA is expected to be in line with previous expectations, reflecting “cost and capacity reduction initiatives and the resilient margin performance for the year as a whole.”
Due to a challenging market backdrop, expected to continue into 2024, during the final quarter of the year Ibstock conducted a comprehensive operational review, with the objective of aligning its fixed cost base and capacity to near term demand expectations.
The consequent restructuring plan has included actions to temporarily reduce capacity across the business, as well as the permanent closure of the South Holmwood brick factory in Surrey.
The annualised benefit of this restructuring plan will be £20 million, with around £5 million of this captured in 2023 and the balance to be achieved in 2024. The one-off cash cost of the restructuring programme (including the closure of the Ravenhead brick factory announced in August) will be around £15 million.
Joe Hudson, CEO of Ibstock PLC, said: “Against a challenging market backdrop, we are pleased to have delivered a resilient performance in the final quarter and for the year as a whole.
“Throughout the period we have focused on taking the right actions in light of near term market conditions, which has led to the difficult but necessary decision to reduce headcount across the business. At the same time, we have continued to progress the projects that will underpin growth as our markets recover.
“While the pace and timing of the recovery remain uncertain, Ibstock is in robust financial health, with the balance sheet strength and financial flexibility to ensure we remain well-positioned for a return to growth over the medium term.”