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Wed September 23 2020

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Lockdown plunges Ibstock into £52m half-year loss

6 Aug Brick maker Ibstock is set to close three plants in a restructure forced on it by the costs of the Covid-19 lockdown.

Ibstock closed all of its production facilities in early April, and while a phased re-opening began in mid-May, it is still not fully open.

Ibstock made a pre-tax loss of £52m in the first half of 2020 (2019 H1: £41m profit), with one-off costs of £41m related to Covid-19 and restructuring.

Two clay brick factories, representing 5% of production capacity, will be closed and the Atlas clay brick manufacturing facility in the West Midlands will be mothballed as part of the restructuring. A planned £45m investment at the Atlas site has been put on hold.

There will be changes to operating patterns at other sites and a restructuring of support functions to cut overheads.

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And, as announced in June, up to 375 positions (around 15% of the workforce) are being made redundant.

The restructuring is expected to cost £10m this year and save £20m a year from 2021.

Chief executive Joe Hudson said: “We entered the crisis with a strong balance sheet. Decisive management action at the outset of the pandemic to control costs and preserve cash ensured the group was adjusted free cash flow positive during the second quarter and we remain in a solid financial position. With new safe working procedures in place, the majority of our manufacturing plants have now reopened and we are encouraged by recent market trends.

"The fundamentals for our markets remain positive, with a substantial housing deficit in the UK and government policy which is supportive of the role the construction sector will play in the UK economic recovery. The action we have taken to strengthen the business and improve liquidity, including measures to reduce costs and restructure our operations, provide further flexibility and position us well both to meet current challenges and benefit from recovery in our core markets."

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