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Ibstock plc Interim Results Statement – period 6 months to 30 June 2022
Ibstock Plc ("Ibstock" or the "Group"), a leading UK manufacturer of clay bricks and concrete products and solutions, announces its results for the six months ended 30 June 2022.
Interim results for the six months ended 30 June 2022
Strong first half performance gives confidence for the full year; good further progress with strategic initiatives
Ibstock Plc ("Ibstock" or the "Group"), a leading UK manufacturer of clay bricks and concrete products and solutions, announces its results for the six months ended 30 June 2022.
Adjusted results1 | ||||
|---|---|---|---|---|
Six months ended 30 June | 2022 | 2020 | Change | % |
Adjusted EBITDA | £71m | £55m | +£16m | +29% |
Adjusted EPS | 11.3p | 7.9p | +3.4p | +43% |
Adjusted free cash flow | £30m | £23m | +£7m | +29% |
Net debt | £36m | £53m | £18m lower | 33% lower |
Return on Capital Employed | 19.8% | 14.2% | +560 bps | +39% |
Financial highlights
- Strong first half performance, despite industry-wide inflation and supply chain challenges, resulting in robust profit and cash generation, and giving confidence for the full year
- Robust demand in new build residential, RMI and infrastructure markets
- Continued strong operational performance, with consistent network reliability and tight focus on cost management
- Revenue increased by 28% to £259 million (2021: £202 million), with strong volume growth supported from inventories, alongside material pricing benefit
- Adjusted EBITDA1 up 29% to £71 million (2021: £55 million), with growth driven principally by clay performance, reflecting a mid-single digit volume increase and good margin management
- Adjusted EBITDA1 margins of 27.3% were 20bps ahead of the prior year (2021: 27.1%) despite significant variable cost inflation and after £1.5 million of operational investment in Ibstock Futures and £4 million one-off cost of living charge
- Statutory profit before tax of £51 million (2021: £39 million) reflects strong first half trading performance
- Return on Capital Employed (ROCE)1 increased by 560bps to 19.8% (2021: 14.2%), approaching Group’s medium-term target of 20%
- Interim dividend increased by 32% to 3.3p per share (2021: 2.5p), reflecting the strong performance and the Board’s confidence in the Group’s prospects
Strong momentum into H2 2022
- Trading in the early weeks of the second half remains encouraging, with resilient demand across end markets
- Backed by strong forward order visibility, we expect good year on year progress in H2, despite capacity slightly below H1 due to phasing of planned shutdowns and some inventory rebuild
- Expect to maintain tight control of costs, and retain our dynamic pricing strategy against a backdrop of ongoing cost inflation
- Energy price risk well mitigated with over 90% of energy requirements for H2 2022 now secured and approaching 50% secured for 2023
- While mindful of broader macroeconomic uncertainties, the Board now expects to deliver adjusted EBITDA1 for 2022 modestly ahead of the expectations signalled at the time of the AGM statement in April
Increasing confidence in the Group’s longer term potential
- Strong trading in H1 2022 demonstrates organic growth momentum towards the Group’s stated targets of revenues >£600m and adjusted EBITDA1 margin of at least 28% by 2026
- UK construction markets remain solidly underpinned over the medium-term, with a structural housing deficit, healthy mortgage availability and supportive government policy
- Strategic growth initiatives progressing well:
- Capital enhancement projects in clay business now complete – network capacity increased by 5% in line with expectations
- Atlas and Aldridge investment on track and now expected to deliver annualised EBITDA1 of £18 million (50% above previous expectations) on capital cost of up to £75 million, representing improvement vs original ROCE1 target
- Continued focus on ESG agenda with set of interim targets and factory-level plans being established to drive progress against our new strategic goals
- Ibstock Futures continues to invest in leadership, innovation and commercial capability and is progressing organic and inorganic initiatives to accelerate the Group’s entry into fast growth construction product, solution and technology markets; further bolt-on acquisitions under review
- Balance sheet remains strong, with leverage below the bottom end of the target range, after £11 million of growth investments during H1 2022 and £6 million spent on buying back shares
Joe Hudson, Chief Executive Officer, commented: “I am very pleased with the Group’s first half performance, delivering profit and cash both significantly ahead of the prior period, supported by sustained robust demand across all our end markets and good operational execution.
“We continue to manage inflation and supply chain pressures well and are making good progress with our strategic development plans, with investments in new capacity progressing well, and good momentum in Ibstock Futures, as we focus on the delivery of our ambitious medium term financial targets.
“Our market backdrop remains encouraging in the early weeks of the second half - demand is firm, asset utilisation is high and industry inventories remain low – and the strong first half performance gives us confidence in the full year outcome. We have a clear strategy based on both core and diversified growth and will continue to apply our dynamic and disciplined approach to capital allocation.
“While we remain mindful of the broader macroeconomic uncertainties, the Board now expects to deliver adjusted EBITDA1 for the full year modestly ahead of the expectations signalled in April.”
1 Alternative Performance Measures are described in Note 3 to the results announcement.
Results presentation
Ibstock is holding a presentation at 10.30 today at 54 Hatton Garden, London, EC1N 8HN.
Please contact ibstock@citigatedewerogerson.com to register your in-person attendance.
An archived version of today's webcast analyst presentation will be available later today.
About Ibstock Plc
Ibstock Plc is a leading UK manufacturer of clay bricks and a diversified range of clay and concrete products and solutions. Its principal products are clay bricks, brick components, concrete roof tiles, concrete alternatives for stone masonry, concrete fencing and pre‐stressed concrete products.
The Group's 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 18 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.
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