Ibstock Plc (LSE:IBST), the UK manufacturer of building products and solutions, has lowered its full-year earnings expectations following a sharp deterioration in trading conditions during the third quarter of 2026, with weakness continuing into October.
The company now expects adjusted EBITDA for the year ending 31 December 2026 to be in the mid-£40 million range, reflecting weaker brick sales, reduced production and additional costs associated with lower factory utilisation.
UK Brick Market Decline Weighs on Third-Quarter Sales
Industry figures showed UK brick market volumes declined by approximately 17% year on year during July and August, reflecting continued pressure on construction activity.
Against this backdrop, Ibstock maintained its domestic brick market share during the third quarter, while average selling prices remained broadly in line with expectations.
However, weaker market conditions persisted through September and October, with third-quarter sales in the Group’s Clay division falling 22% below expectations.
In response, Ibstock reduced production by approximately 20% compared with the plans established at the half-year stage, aiming to align manufacturing output with demand and prevent excess inventory accumulation.
The resulting reduction in fixed-cost absorption is expected to lower adjusted EBITDA by approximately £6 million, in addition to the earnings impact of weaker sales volumes.
Full-Year EBITDA Forecast Reduced to Mid-£40 Million Range
Ibstock said the combined effects of lower sales and reduced production would result in second-half financial performance materially below its previous expectations.
The company has introduced further cost-saving measures, primarily targeting overheads and discretionary expenditure, to partially offset the impact.
Management is also prioritising cash generation through tighter inventory control, disciplined capital expenditure and reduced discretionary spending.
Ibstock expects its strategic land assets, including those associated with calcined clay, to provide opportunities to support debt reduction in the near term.
Housing Support Scheme Offers Potential Medium-Term Benefits
Ibstock welcomed the government’s Your First Home support scheme, which it believes could improve housing affordability and stimulate demand for newly built homes.
However, the company expressed disappointment that the scheme will not be introduced until April 2027, noting that the delay has placed additional pressure on near-term demand.
Despite current market weakness, Ibstock said the initiative supports its confidence in the medium-term outlook for UK housing construction.
Nostell Factory Commissioning Remains on Schedule
The company reported continued progress with commissioning its new ceramic façades manufacturing facility at Nostell.
Commissioning is expected to be completed by the end of 2026.
The facility is intended to expand Ibstock’s product portfolio, with management expecting it to deliver financial returns over the medium term as production volumes increase.
CEO Comments on Trading Conditions
Joe Hudson, Chief Executive Officer of Ibstock, said:
“Trading conditions deteriorated sharply during the third quarter, with weakness continuing into October. We have responded by reducing production to manage inventory, taking further cost action and maintaining tight control of cash. These production decisions create an additional near-term earnings headwind but are necessary to align output with demand.
We will continue to focus on cash generation and net debt reduction, alongside completing commissioning at Nostell and progressing opportunities to realise value from our asset base. The announced support for first-time buyers is encouraging, although its introduction in April 2027 may weigh on demand in the intervening period. Our market-leading offering and well-invested production base enables us to benefit when activity recovers.”
More About Ibstock Plc
Ibstock Plc is a UK manufacturer of building products and solutions, operating through its Clay and Concrete divisions.
Its Clay division operates 15 manufacturing sites supported by 15 active quarries, while its Concrete division operates 13 manufacturing facilities producing roofing, walling, flooring, fencing and infrastructure products.
The Group also operates Ibstock Futures, which focuses on sustainable building products and modern methods of construction.
Ibstock’s environmental strategy includes a target to reduce carbon emissions by 40% by 2030 and achieve net-zero operations by 2040.
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