Brickability revenue falls but gross profit grows

Construction materials distributor Brickability reported total first-half revenue of £324.8m on Tuesday, making for a 7.9% decline compared to the same period in the prior year.

The AIM-traded firm said that on a like-for-like basis, that represented a more substantial 14.4% reduction.

Despite the revenue decrease, the company achieved a gross profit of £55m in the six months ended 30 September, slightly surpassing the £54.9m reported in the first six months of the 2023 financial year.

Brickability also improved its gross profit margin, rising to 16.9% from the prior year’s 15.6%.

Adjusted EBITDA increased marginally to £25.6m from £25.5m, while adjusted profit before tax decreased 2.7% to £21.8m.

Statutory profit before tax, however, increased 8.8% to £16m, while statutory earnings per share saw a slight uptick of 1.1% to 3.78p, whereas adjusted earnings per share decreased 11.7% to 5.3p.

The company reported net debt of £30.9m as of 30 September, compared to £27.4m a year earlier.

Additionally, Brickability announced an increased interim dividend of 1.07p per share, up from 1.01p.

On the operational front, Brickability reported resilience in the face of a challenging macroeconomic and geopolitical environment during the first half.

The contracting and distribution divisions delivered solid performances, according to the board.

Looking ahead, Brickability highlighted its strategic acquisition of Group Topek Holdings in October, expanding its cladding capabilities and significantly increasing its presence in the cladding remediation market.

The company also increased its borrowing facility to an initial £100m, up from £60m, providing more liquidity for working capital requirements and potential future acquisitions.

Brickability said its strategic focus on diversification had led to a reduction in the proportion of brick revenues to about 50% of group revenues.

The company said it expected forecasted reductions in newbuild volumes to impact the performance of its existing businesses in the second half.

However, the acquisition pipeline remained promising, aligning with its acquisition criteria for targeted growth.

“It is pleasing to report a first-half performance, and maintained profitability, in line with board expectations despite challenging trading conditions,” said chairman John Richards.

“Whilst we have previously communicated that the second half of the year is anticipated to see industry-wide volume reductions, which the group is not immune, the board continues to believe that Brickability’s diversified, multi-business approach positions the group to continue to perform well in the current market backdrop and in the future.

“The acquisition of Topek is the group’s second largest to date and, with the acquisition of Taylor Maxwell having delivered a significant increase in exposure for the group to public and commercial end markets, the addition of Topek further increases our presence in these markets.”

Richards said market conditions would continue to be uncertain in the near term but added that having built a robust and diverse business and a disciplined approach to costs, the firm was confident in its ability to continue delivering on its strategy.

“The board is pleased to recommend an interim dividend of 1.07p per share, reflecting the performance of the business in the half year and the board’s confidence in the longer-term outlook for the group.”

At 1437 GMT, shares in Brickability Group were down 1% at 49.5p.

Reporting by Josh White for Sharecast.com.