Ibstock (LSE:IBST) warned on Monday that full-year earnings (adjusted EBITDA) will land in the mid-£40 million range, as the London-listed building products manufacturer confirmed second-half performance will come in materially below its previous expectations.
The UK brick and clay products maker said weak demand persisted through September and October, with Clay division sales in the third quarter running 22% below expectations.
Industry data showed UK brick market volumes fell approximately 17% year on year across July and August, though Ibstock said its domestic brick market share held steady over the same period, with average selling prices broadly in line with expectations.
To limit inventory build against the weaker backdrop, Ibstock cut production in the third quarter by approximately 20% versus the plans set out at the half year, a move expected to reduce adjusted EBITDA by around £6 million through lower fixed-cost absorption, on top of the hit from reduced sales volumes.
The group has leaned further into cost reduction and cash management, targeting overhead and discretionary spending to partially offset the impact, and said it is prioritising cash generation through tighter control of inventory, capital expenditure and discretionary costs.
"Trading conditions deteriorated sharply during the third quarter, with weakness continuing into October," said chief executive Joe Hudson, adding that the production cuts "create an additional near-term earnings headwind but are necessary to align output with demand."
Ibstock said the government's Your First Home support scheme for first-time buyers could prove a meaningful intervention for the housing market, improving affordability and strengthening confidence in future supply, but called the delay to its introduction until April 2027 disappointing, warning it adds further pressure to near-term demand.
On strategic progress, commissioning of the group's ceramic façades factory at Nostell is on track to complete by the end of the year, a facility Ibstock expects to broaden its product range and deliver attractive financial returns over the medium term as volumes build.