Although demand remains strong and Ibstock’s UK brick factories have been producing at, or close to, full production capacity for some time now, it seems that the work has taken a toll on the machinery and production has been impacted recently, particularly in July.
A 12-month period of increased maintenance activity is now planned “to ensure the factories can operate at sustainable levels to meet continued increasing demand”, the company said today.
The new brick factory in Leicestershire is outside the scope of these measures and is expected to be fully commissioned by the end of 2018, as planned.
A weather-impacted start to the year and higher energy costs have also hit profits.
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As a result Ibstock now expects that adjusted EBITDA for 2018 will be in the range of £121m to £125m with reported EBITDA (which includes one-off profit from sale of surplus property) in the range £130m to £134m.
Chief executive Joe Hudson, who joined Ibstock from Lafarge Holcim earlier this year, said: "Demand in our UK brick markets is robust and the outlook for our UK Clay business remains encouraging, supported by the ongoing need for new housing. As market leader Ibstock is in a strong position to benefit from this positive backdrop.
"However, following my appointment as CEO, the group has completed a review of its brick manufacturing assets which has identified a number of measures that are required to sustain the quality and range of our production output. While the resulting additional maintenance shutdowns and extra spending on plant maintenance and refurbishment will have a short-term impact on our financial performance, we firmly believe that it is the right thing to do for our customers and to maximise long-term value for shareholders. We will be working closely with all customers to ensure we continue to meet their demand requirements over the second half."
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