Ibstock cuts production and profit outlook as UK brick demand weakens

Ibstock, the UK’s largest brickmaker, has cut production by a fifth after sales in the quarter ending in September came in 22% below its expectations. The Leicestershire-based company said on Monday that deteriorating conditions in the housing market had forced it to lower its annual profit outlook for the second time this year.

The company now anticipates full-year profits in the mid-£40m range, compared with an earlier analyst consensus of £59m. Its shares fell more than 8% following the announcement, which highlighted continued weakness in demand and disappointment over the timing of new government assistance for homebuyers.

The slowdown extended across the wider brick industry. Ibstock said UK brick market volumes were 17% lower in July and August than in the same months a year earlier. Difficult trading conditions persisted during September and October, leaving the company seeking to bring its output into line with demand.

Chief executive Joe Hudson said the business was reducing production to control inventories, pursuing further cost reductions and closely managing cash. He acknowledged that producing fewer bricks would put additional pressure on earnings in the near term, but said the adjustment was necessary. Ibstock said its savings and cash management measures were concentrated mainly on overheads and discretionary spending.

The warning followed a reduction in the Office for Budget Responsibility’s housebuilding forecast days earlier. The watchdog cut its projection for the number of new homes to be built by 2031 by 190,000. Housing secretary Angela Rayner has acknowledged that the government has only a slim chance of delivering its target of 1.5m homes during this parliament, amid estimates that construction could fall short by a third.

Ibstock welcomed the government’s Your First Home scheme, which is intended to enable first-time buyers in England to purchase newly built homes with a 2.5% deposit. However, it criticised the decision to wait until April 2027 to introduce the programme, saying the delay had placed further pressure on near-term demand.

The brickmaker said the scheme could improve affordability, encourage purchases of new homes and bolster confidence in future housing supply. Although the announcement supported its confidence in the market’s medium-term prospects, the company expressed disappointment that help would not arrive sooner.

Peel Hunt analysts Clyde Lewis and Sam Cullen said building companies exposed to the domestic market continued to face difficult industry conditions. They expected the new programme to provide modest help next year, while identifying lower interest rates as central to a recovery in sector activity and share prices.