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Share Price:
Up 216.80p
Change Today:
3.20p
Market Cap:
887.93m
Sector:
Construction & Materials

Ibstock could cut 15% of workforce as sales volumes slide on Covid shutdowns

By Michele Maatouk

Date: Wednesday 03 Jun 2020

LONDON (ShareCast) - (Sharecast News) - Ibstock said on Wednesday that sales volumes slid from late March after the coronavirus lockdown was imposed, as it announced that around 15% of its workforce could be axed.
In an update for the five months to the end of May, the manufacturer of clay bricks and concrete products said sales volumes in the first 10 weeks of the year were "modestly below" the comparative period as it entered 2020 "against the backdrop of more subdued market conditions".

There was a sharp drop in sales volumes from late March as the government introduced measures to slow the spread of Covid-19 and Ibstock's construction and housebuilding customers closed sites.

In April, volumes in the clay division fell around 90% on the year, but volumes in the concrete segment were "relatively more resilient" thanks to their exposure to infrastructure and repair, maintenance and improvement markets.

Ibstock said trading conditions have started to improve as the construction and housebuilding sectors return to work. The group said it has seen a "modest" recovery in clay brick sales although volumes remain around 70% below this time last year. Concrete volumes are now at around half the level they were in the same period in 2019.

Overall, group revenues for the three months to 31 March were down around 10% versus the comparative period, with a 75% decline in the two months to 31 May 2020.

The company said it was conducting a review of all operations which should lead to a material reduction in its fixed cost base. As part of a series of restructuring proposals, it has entered into consultations with employees, with up to 375 positions - or 15% of the workforce - potentially impacted.

"Current trading conditions remain difficult but the combination of the cost reductions, restructuring measures and improved liquidity have strengthened the group's ability to meet current challenges and benefit from the eventual recovery in its core markets," it said.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "With housebuilders suspending operations for several weeks it's no surprise brick demand has collapsed. Even now the sector's returned to work output is likely to be lower and slower, with a focus on running down existing inventories, and as a result it will take longer for the recovery to reach Ibstock.

"Since the group can do nothing about the unpleasant market conditions, management's focus is on cutting costs and nursing the balance sheet through the current crisis by preserving cash. It's had some early success, thanks to government support, but with net debt already jumping significantly it needs to do more if it's to weather what could be a sustained slowdown."

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.

 

Ibstock Market Data

Currency UK Pounds
Price 216.80p
Change Today 3.20p
52 Week High 242.40p
52 Week Low 143.10p
Volume 651,939
Shares Issued 409.56m
Market Cap 887.93m

Performance Indicators

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What The Brokers Say

Strong Buy 4
Buy 0
Neutral 7
Sell 0
Strong Sell 0
Total 11
buy
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Ibstock Dividends

  Latest Previous
  Final Special
Ex-Div 15-Apr-21 15-Aug-19
Paid 14-May-21 20-Sep-19
Amount 1.60p 5.00p

Trades for 22-Jun-2021

Time Volume / Share Price
15:16 98 @ 216.80p
15:16 276 @ 216.60p
15:16 270 @ 216.60p
15:15 1,916 @ 216.53p
15:15 600 @ 216.40p

Ibstock Key Personnel

Chair Jonathan C Nicholls
CEO Joe Hudson
CFO Chris McLeish