Ibstock reinvests rocketing profits
Britain’s biggest brick maker made a pre-tax profit of £111m on revenues of £435m in 2016 and it is ploughing much of it back into the business for further growth.
Although shareholders will get a 5.3 pence per share, Ibstock is investing in new capacity and new products.
A new metric roof tile line at Forticrete was commissioned in the fourth quarter of 2016 and first tiles introduced to the market to excellent customer reception
A new soft mud brick manufacturing plant is under construction in Leicestershire that is expected to add approximately 100 million bricks a year to Ibstock’s brick production capacity, a 13% increase. The new plant is expected to be commissioned in the second half of 2017.
And £8m is being invested in a project to improve manufacturing efficiencies and increase blue brick capacity at Lodge Lane, Cannock. Work on this started at the back end of 2016 .
With 19 manufacturing plants, Ibstock Brick has the largest brick production capacity in the UK. It also operates a network of 23 active quarries.
The UK businesses represented 79% of the group's revenue in 2016 and the adjusted EBITDA increased 4% year-on-year for the UK segment at £103. Its US brick making business, Glen-Gery has a network of 10 manufacturing plants, 10 distribution centres and 29 active quarries.
While UK sales slowed in the weeks approaching the EU referendum, by a month later they were back to where they had been the previous year, stayed strong over the summer and accelerated as the year came to an end.
Chief executive Wayne Sheppard said: “Ibstock delivered a robust full year performance for 2016, with the group result ahead of the prior year despite the uncertainty arising from events such as the EU referendum in the UK and the US presidential election. At the same time we have continued to invest in the future of the business with our new tile line at Forticrete now in operation, construction of the new Leicestershire brick plant on schedule and a further capacity expansion project underway at Lodge Lane in Staffordshire. The main earnings benefits from these investments will flow through in future years.
"We have made an encouraging start to the new financial year, against softer comparatives from 2016 when our UK clay business was affected by distributor destocking. With continued strength in the new home developer market, normalised demand from the merchant sector in the UK, and a positive economic backdrop in the US, our businesses have traded ahead of the prior year in the early weeks of 2017. While we remain mindful of the uncertainties surrounding Brexit we maintain our expectations for another year of progress."
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This article was published on 7 Mar 2017 (last updated on 7 Mar 2017).