Ibstock (IBST) H2 2023 earnings summary

Executive summary

• Resilient FY2023 performance amid a severe downturn in UK residential construction; active cost and capacity measures supported margins and balance-sheet resilience.

• Revenue fell 21% to £406m; adjusted EBITDA declined 23% to £107m and adjusted EPS fell 39% to 13.9p.

• Strategic investments in lower-carbon manufacturing, facades and concrete broadened growth options; recovery pace remains dependent on market conditions.

Financial highlights

• Revenue was £406m versus £513m in 2022; adjusted EBITDA was £107m versus £140m, and adjusted EBITDA margin was 26.5% versus 27.2%.

• Adjusted EBIT was £78m versus £113m; adjusted profit after tax was £54m versus £91m, and adjusted EPS was 13.9p versus 22.7p.

• Statutory profit after tax was £21m and statutory EPS was 5.4p; exceptional restructuring charges were £31m.

• Adjusted free cash flow was negative £16m versus positive £50m; capex rose to £66m from £58m, including £45m of organic growth investment.

Outlook and guidance

• Markets are expected to remain subdued in FY2024, with improvement anticipated as the year progresses; early 2024 activity remained subdued.

• Restructuring actions are expected to deliver a £15m YoY benefit in FY2024; modest overall cost inflation and energy cover of ~70% at prices broadly in line with 2023 are expected.

• FY2024 underlying depreciation is expected at ~£34m; interest expense ~£8m and effective tax rate ~26%.

• FY2024 sustaining capex is expected at ~£20m, growth capex at £25m–£30m, cash tax below £5m and restructuring cash outflows at £10m.

• Medium-term financial targets remain in view, subject to the timing of market recovery.