TIDMIBST
RNS Number : 2323W
Ibstock PLC
22 April 2021
22 April 2021
Ibstock plc
AGM Trading Update & Strategic Growth Investment
Ibstock plc ('Ibstock' or the 'Group'), a leading UK
manufacturer of clay bricks and concrete products, announces a
trading update for the first quarter of FY 2021 and a significant
strategic growth investment in its Clay Division, ahead of its
Annual General Meeting, which is to be held at 11:00am today.
Highlights
-- FY2021 has started well, with trading modestly ahead
of expectations, and the Board remains confident in
prospects for the year
-- GBP60 million investment in Atlas and Aldridge plants
will deliver 115 million brick capacity and a GBP12m
EBITDA contribution per annum once fully operational,
with the re-developed Atlas plant expected to be the
first net zero carbon brick-manufacturing facility
in the UK
-- Investment will be self-funded from the Group's cash
flow, in accordance with existing leverage and capital
allocation frameworks, and is expected to achieve attractive
target returns
Trading update
The Group has made a good start to the new financial year,
trading modestly ahead of expectations, with robust demand from
both the new build housing and Repairs, Maintenance &
Improvement (RMI) end markets. Sales volumes in the Clay division
for the first quarter were ahead of internal expectations, whilst
Concrete volumes for the quarter were in line with internal
expectations.
The Board is encouraged by this performance and, whilst
remaining mindful of the economic uncertainties and disruption
caused by COVID-19, remains confident for the year ahead.
Strategic growth investment
UK housing market fundamentals remain strongly positive, with a
structural undersupply of new build housing which is expected to
continue over the medium term. As the residential housing market
recovers, domestic demand for clay bricks will continue to exceed
that available from domestic manufacturing capacity.
Against this backdrop, the Group is recommencing the project to
redevelop its Atlas site in the West Midlands, replacing the
existing mothballed facility with a new state-of-the-art wire cut
clay brick factory. The Atlas project has been revised and expanded
since the announcement of the original proposal in early 2020, with
an increase in capacity and further significant enhancements to
deliver improved environmental performance. The project also
includes investment to upgrade and expand capacity at the adjacent
Aldridge brick factory.
The new Atlas factory will have outstanding sustainability
characteristics, incorporating state of the art technology, with
significantly reduced process emissions, resulting in a major
reduction in carbon intensity. Ibstock believes that, in
combination with a planned investment in high quality environmental
projects to offset the remaining carbon, the Atlas site will be the
first net-zero brick-manufacturing facility in the UK.
In total, the redeveloped facilities will deliver capacity of
115 million bricks per annum, equivalent to a net increase in
Ibstock Clay's network capacity of 75 million bricks, after taking
into account the existing capacity of the (mothballed) Atlas
factory. Together, the Atlas and Aldridge factories will benefit
from the existing strong transport infrastructure, and high quality
clay reserves at the site.
The total capital cost of the project, which is subject to final
planning permission, will be c. GBP60 million, with both the new
Atlas factory and the upgraded Aldridge factory expected to begin
commissioning in the second half of 2023. The anticipated timing of
cash outflows is expected to be around GBP10 million in 2021, GBP30
million in 2022, GBP15 million in 2023 and the balance in 2024. At
full output, from late 2024, the project is expected to deliver
incremental EBITDA of at least GBP12 million per annum and to
provide a return on capital employed (ROCE) in line with the Group
average.
Joe Hudson, Chief Executive Officer of Ibstock plc
commented:
"We've made an encouraging start to 2021, supported by robust
demand in both the new build housing and RMI markets."
"With the market outlook now clearer, we are refocusing on
growth. Redevelopment of our wire cut brick facilities in the West
Midlands will deliver a significant capacity expansion, further
demonstrating our leadership in the clay brick market, which is
expected to continue its long-term growth over time. The project is
another tangible example of our commitment to the net zero carbon
journey and provides a great exemplar of British building products
manufacturing."
"We have a number of additional organic investment opportunities
under evaluation and expect to update shareholders on these as the
year progresses."
Analyst call
Ibstock is hosting a conference call for investors and analysts
at 0830 UK time today.
Conference Call Dial-In Details: +44 (0)330 336 9434
Confirmation code: 5852885
An archived version of today's call will be available on
www.Ibstockplc.co.uk later today.
The Group has also posted today on its website
(www.Ibstockplc.co.uk) a set of Frequently Asked Questions (FAQs)
to provide further information on the Atlas investment.
Ibstock's Annual General Meeting (AGM) will take place later
today at 11.00am. As previously stated given the ongoing
restrictions relating to COVID-19, the meeting is being held with
the minimum attendance necessary to form a quorum and shareholders
will not be permitted to attend the AGM in person. Shareholders are
able to register to hear an audio webcast of the AGM online;
details can be found on our website www.Ibstockplc.co.uk .
01530 261
Ibstock plc 999
Joe Hudson, CEO
Chris McLeish, CFO
Citigate Dewe Rogerson 020 7638 9571
Kevin Smith
Nick Reading
About Ibstock plc
Ibstock plc is a leading UK manufacturer of clay bricks and a
diversified range of clay and concrete products. Its principal
products are clay bricks, brick components, concrete roof tiles,
concrete substitutes for stone masonry, concrete fencing and
pre--stressed concrete products.
The Group's two divisions are:
Ibstock Clay: The leading manufacturer by volume of clay bricks
sold in the United Kingdom. With 16 manufacturing sites Ibstock
Brick has the largest brick production capacity in the United
Kingdom. It operates a network of 18 active quarries located close
to its manufacturing plants. Ibstock Kevington provides masonry and
pre-fabricated component building solutions, operating from 6 sites
across the United Kingdom.
Ibstock Concrete: A leading manufacturer of concrete roofing,
walling, flooring and fencing products, along with lintels and
general concrete building products, with 14 manufacturing plants in
the United Kingdom.
This announcement contains inside information. The person
responsible for making this announcement is Nick Giles, Group
Company Secretary.
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END
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