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Mon June 27 2022

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Ibstock looks to diversify

9 Mar Ibstock is looking to grow revenues by 50% in the next three years by diversifying.

Ibstock chief executive Joe Hudson
Ibstock chief executive Joe Hudson

Ibstock is well-known for its clay bricks and concrete masonry products but is looking for new revenue streams to grow group revenues beyond £600m by 2026.

In November we reported the launch of Ibstock Futures, a new venture targeting both the new build and re-cladding markets, with products for mid- and high-rise building applications. Ibstock Futures' launch project is a £50m automated brick slip systems factory being built in Nostell, West Yorkshire.

The new factory will manufacture a wide range of different brick slips and associated systems and will incorporate the latest manufacturing technology. They will be the UK's first net-zero carbon brick slip, Ibstock says. Construction at the site started in the first quarter of 2022 and is progressing to plan, with commissioning expected from late 2023.

Ibstock Futures is also planning the development or acquisition of technology solutions for specific applications, including potential alternative uses for its existing clay reserves. In line with this strategy, a few weeks ago Ibstock Futures completed a small acquisition to establish a strong position within glass reinforced concrete (GRC) panel technology, which is supplied into facade applications.

“GRC is an exciting new technology which offers the traditional strength of concrete but with significant like-for-like material savings, bringing environmental benefits to the construction process,” chief executive Joe Hudson said. “It falls firmly within the strategic scope of the Ibstock Futures business and we look forward to developing our offering in this area.”

Ibstock is also looking for organic growth in its core business. It is investing £60m over the next two years to redevelop its wire-cut clay brick facilities in the West Midlands, including the construction of a new factory at its Atlas site, which will manufacture the UK's first net-zero carbon bricks from late 2023.

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Ibstock’s results for 2021 show a pre-tax profit of £65m on revenue of £409m, a strong rebound from 2020 when the closure of house-building sites hit sales. In 2020 Ibstock lost £24m before tax on sales of £316m. The 2021 turnover was back to 2019 levels. The target is £600m revenues by 2026.

Commenting on the financials, chief executive Joe Hudson said: "Our 2021 results reflect both continued robust demand across our markets and strong operational execution. Despite market-wide challenges arising from cost inflation and supply chain pressure, we have delivered a result ahead of the board's expectations, and are well positioned for future growth.

“Whilst we remain mindful of the broader macroeconomic uncertainties, particularly in light of the tragic conflict in Ukraine, we have made a good start to 2022, with a strong demand backdrop. This positive momentum, along with additional brick capacity coming on stream during 2022, provides us with a strong platform to deliver significant further financial and strategic progress.

“Today, we also set out a path for growth and value creation over the next five years, combining expansion of our core business with accelerated diversification into new, fast growing areas of the UK construction market. These strategic ambitions are underpinned by clear financial objectives and capital discipline, which are reflected in the new medium term financial targets. We expect to generate significant additional capital, in excess of our current commitments, over the next five years, which will support both further growth investments and additional shareholder returns.”

“With the built environment accounting for around 40% of carbon emissions globally, our industry has a vital role to play in delivering climate change solutions. With our plans to produce the UK's first net-zero carbon bricks and brick slips well underway, we are supporting our customers in addressing their carbon reduction goals. Having achieved many of the environmental targets set in 2018 several years earlier than expected, we have now announced our new ESG strategic framework and targets, including our commitment to be a net zero carbon business by 2040."

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