Ibstock's 2016 revenue rises after pick-up in second half

Ibstock’s 2016 revenues rose due to a stronger second half from increased activity in the housing sector, while the brick manufacturer remains cautious due to uncertainties surrounding Brexit.

Revenue was up 5% to £435m, compared to the previous year, which resulted in a 28% rise in pre-tax profit to £110.9m.

To take note of, the comparable 2015 period only included 10 months of trading.

The clay business in the UK saw a stronger second half of 2016 driven by good activity levels from the new build housing sector and gradual reversal of brick destocking by UK merchants and distributors with full-year brick volumes slightly ahead of the previous year.

Adjusted earning before interest, tax, depreciation and amortisation (EBITDA) increased 4% to £112m and adjusted earnings per share was 18.1p.

The net debt to EBITDA ratio reduced to 1.2 times, after £59m of capital expenditure in 2016 and the return on capital employed was at 19%, after £44m of capital expenditure on major projects, while it continued strong cash conversion of 88%.

Ibstock declared a final dividend of 5.3p per share, up from 4.4p, making the full year dividend 7.7p.

The company has several UK projects, including a new metric roof tile line at Forticrete which was commissioned in the final quarter of 2016, a new 100m per year capacity brick manufacturing plant in Leicestershire on schedule to commission in the second half of 201, and an £8m project to improve manufacturing efficiencies and increase blue brick capacity at the Lodge Lane site in Cannock.

While across the Atlantic, the US business, which represented 21% of the Ibstock's revenue in 2016, saw continued growth during the year with revenue increasing 4% to $122m and adjusted EBITDA climbing 40% to $17m.

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.

"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."