Demand in both the newbuild and repair, maintenance and improvement markets meant Ibstock plc (LON:IBST) had a “strong” third quarter.
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Performance was held back by supply chain disruption, as expected, but are not expected to derail management’s forecast for underlying cash profits to come in above £93m.
Ibstock announced plans to create a new business unit, dubbed Ibstock Futures, which will focus on growth initiatives, starting with the manufacture brick slips, a type of brick façade. The group will spend £50m to create a brick slip factory in West Yorkshire as part of this new strategic initiative.
The share were broadly flat following the announcement.
Ibstock’s Q3 Earnings
Laura Hoy Equity Analyst at Hargreaves Lansdown:
“Ibstock’s managed to successfully navigate a challenging few months as supply chain issues and input cost inflation weighed on the business. Management’s successfully passed much of that extra cost on to customers through price rises. That’s left the group in a position to focus on growth with a new segment dubbed Ibstock Futures.
The new division will initially be responsible for brick slips and Ibstock will shell out £50m to build a new factory to make the brick façade blocks. This will be the first of its kind in the UK, and is expected to bring in roughly £10m per year in cash profits once it’s up and running. That represents a 10% increase from this year’s expected profits.
If Ibstock can execute successfully, it would put the group in a strong position to capitalise on a shift toward more sustainable building materials. While brick homes have appeal in the UK market, these thinner, lighter, look-alikes come with a lower carbon footprint.”
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