Ibstock surpasses expectations with revenue of £513 million

This strong performance reflects the effectiveness of the group's business model and the strategic progress it has made over the last five years.

Ibstock Group’s Chief Executive Officer Joe Hudson proudly announced the result for the year ended December 31, 2022, which were materially ahead of both the prior year and pre-pandemic levels.

The group, a leading UK manufacturer of clay bricks and concrete products and solutions with 40 production plants and 3,000 employees, posted revenues of £513 million in 2022, up 26% from £409 million in 2021, while EBITDA reached £140 million (+36%), exceeding all expectations despite a significant decline in demand in the fourth quarter.

This strong performance reflects the effectiveness of the group’s business model and the strategic progress it has made over the last five years, during which time it has focused on investments, disciplined cost management, operational efficiency, quality and growth in emerging niche segments within the construction industry.

Hudson commented:

“Industry-wide supply chain challenges were well managed and the impact of inflationary pressures on our cost base, particularly energy, was mitigated through our well-established dynamic commercial approach in both the clay and concrete divisions.”

Ibstock Clay generates £369 million

The brick business delivered excellent financial results, benefiting from solid operational performance and a strong market position. Divisional revenue grew by 32% year on year to £369 million (2021: £280 million) and adjusted EBITDA increased by 40% to £127 million (2021: £91 million).

Market conditions were positive for most of the year, reflecting resilient new build and RMI residential demand. Overall volumes were consistent with the prior year despite some softening in volumes towards the end of 2022 as macroeconomic uncertainty and rising interest rates began to impact on discretionary consumer expenditure.

The Atlas and Aldridge brick manufacturing growth projects are on track to commission from the end of 2023, and set to deliver over 100 million bricks of lower-cost capacity per annum, with the whole Atlas range to be externally verified as carbon neutral. An investment of up to £8 million on an automated brick slip line was initiated in 2022 and will provide capacity for up to 17 million slips when it comes on stream by the end of 2023. This will be followed by the Nostell slip systems factory which is expected to commission from the end of 2024.

The group has made significant progress in its search for sustainable raw materials. During the second half of the year, it commissioned a pilot plant for the production of expanded clay, a lightweight aggregate that has multiple application uses in the construction sector and which is in short supply. It has also advanced its project focused on calcined clay, which has huge potential as a lower carbon cementitious replacement. The two projects are firmly centred on the Group’s ambitious ESG plans. In addition, during 2022 it fired its first bricks using synthetic gas from a waste source in partnership with a strategic partner with funding support from Innovate UK, the UK’s innovation agency.

The Concrete division also delivered a strong performance, with divisional revenue up 12% to £144 million and adjusted EBITDA of £24 million (+9%).

Ibstock Futures to support growth

All strategic operations are managed by Ibstock Futures, the business unit launched in 2021 with the aim of pursuing new growth opportunities in emerging UK construction sectors. The group also recently announced the creation of a state-of-the-art innovation hub in the West Midlands to provide a platform for rapid innovation and expansion. The facility is expected to be operational by the end of the second quarter of 2023.

Outlook for 2023

Trading in the first quarter of 2023 has continued to reflect the cautious demand environment experienced towards the end of last year, although this is expected to improve as the year progresses, supported by sequential demand improvement.

“The platform of capability we now have in place, combined with the investments we are making, provide confidence in our ability to deliver strong growth over the medium-term,” concluded Hudson. “Our energy price risk is well covered with over 80% of energy requirements secured for H1 2023 and 65% secured for the full year. Our strategy is driven from our belief that the construction market will continue to evolve, adopting more sustainable and industrialised processes, practices and products.”