Ibstock lowers earnings forecast as costs rise amid housing market recovery
- Ibstock reported a 26% drop in adjusted EBITDA to £79 million in 2024 due to decreased sales volumes.
- The company now anticipates a 2025 EBITDA between £77 million and £82 million, 14% below market expectations.
- Despite these challenges, Ibstock is optimistic about the recovering UK housing market and its strategic investments.
In the UK, Ibstock, the largest brick manufacturer, recently faced significant challenges affecting its financial outlook. On June 11, 2025, the company issued an unscheduled trading update indicating a rise in fixed costs and lower-than-expected selling prices. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the year 2024 dropped sharply by 26% to £79 million, primarily due to a marked decline in sales volumes. The firm has simultaneously been ramping up capacity at its clay factories to meet the anticipated surge in demand resulting from a recovering housing market. This strategic initiative, while essential for future growth, has led to unexpected increases in incremental fixed costs since operational efficiencies are yet to reach desired levels. Ibstock conveyed that it now expects its 2025 EBITDA to fall within the range of £77 million to £82 million, which is notably 14% lower than current market expectations of £92 million. According to analysts at UBS, the company faces a substantial headwind from pricing not being able to sufficiently cover the ongoing cost inflation, projected at approximately 3% to 4% for the year. Additionally, Ibstock acknowledges a £5 million to £6 million cost associated with the return to its productive capacity. Despite these mounting pressures, the company remains optimistic about ongoing key organic growth initiatives and significant investments in its core business, expressing a commitment to addressing the unmet demand for new housing in the UK. The market has reacted to these developments with Ibstock shares plummeting 14.1% to 166p as of mid-morning on June 11. This decline comes despite the shares being up 13% over the previous 12 months. Ibstock's chief executive, Joe Hudson, stated that although challenges persist, the company is encouraged by signs of recovery in the housing market and is poised to navigate current difficulties through strategic investments and operational improvements.