Ibstock (IBST) H1 2025 earnings summary

Executive summary

• Achieved significant volume growth in H1 2025, mainly from new build residential demand, despite higher-than-expected incremental costs from reactivating network capacity and a competitive pricing environment.

• Strategic progress includes targeted capital deployment, increased contribution from the Futures business, and investments in Atlas and Nostell plants focused on modern construction methods and sustainability.

• Market backdrop was more competitive, resulting in modest price progression and negative mix impact; group is positioned to capitalize on market recovery.

• Statutory profit before tax fell 35% to £7.7m, impacted by lower trading performance and £2.8m in exceptional costs related to site closures and restructuring.

• Interim dividend maintained at 1.5p per share, reflecting confidence in medium-term prospects.

Financial highlights

• Revenue grew 9% year-over-year to £193.4m, driven by strong volume growth, especially in the Clay division.

• Adjusted EBITDA was £35.5m, down 6% year-over-year, with margin at 18.4%, impacted by incremental costs and competitive pricing.

• Adjusted EPS at 3.0p (2024: 3.5p); dividend per share maintained at 1.5p.

• Net debt increased to £144.5m (2024: £137.8m); leverage at 2.2x, with available liquidity of £80m.

• Adjusted free cash flow outflow reduced to £9.6m (2024: £15.5m outflow); cash conversion improved to 32%.

Outlook and guidance

• Full-year adjusted EBITDA expected in the range of £77m–£82m, with H2 profitability expected to improve as operational efficiency ramps up.

• Anticipates further sales volume growth in H2 2025, with positive cash flows and reduced net debt by year-end.

• Medium-term targets: revenue of at least £600m, group EBITDA margin of at least 28%, and ROCE of at least 20%.

• Free cash flow expected to accelerate from 2026 as major investment program concludes.

• Energy requirements well covered for H2 2025 (>80%) and >50% for 2026.