Shareholders in brick manufacturer Ibstock (IBST) ran for cover after June's referendum result raised doubts over the direction of the UK construction market. Uncertainty gathered amid fears that Ibstock - which sells its finished product to housebuilders and property developers - would begin to struggle if liquidity dried up and business confidence faltered. But the foundations of investors' belief seem to have strengthened on these numbers, sending the share price up 8 per cent.
In the group's large UK division, clay product revenue fell due to an industry wide destocking of bricks by builders' merchant and distributor markets. This was offset by a 12 per cent growth in the concrete business, leaving overall UK revenue flat and adjusted operating profit up 1.5 per cent. US revenue was up by a tenth at constant currencies to £38m, thanks to a recovery in the US housing market.
An income uplift relating to the acquisitions made during the first half of 2015 has skewed these results, providing an unhelpful comparison of profitability. Strip out these effects, and adjusted cash profit rose 7 per cent to £55.6m. Ibstock remained cash-flow positive despite shelling out £21m for its new "state of the art" manufacturing site in Leicester. On completion in 2017, the facility is expected to add 13 per cent to the group's current brick capacity.
Broker JPMorgan has upgraded forecasts for the year to December 2016 and now expects adjusted pre-tax profit of £90m for the December year-end, giving adjusted EPS of 17.7p, up from £64m and 11.5p in 2015.
IBSTOCK (IBST) | ||||
|---|---|---|---|---|
| ORD PRICE: | 153.3p | MARKET VALUE: | £623m | |
| TOUCH: | 153.1-153.5p | 12-MONTH HIGH: | 227p | LOW: 113p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 75p* | NET DEBT: | 53% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015** | 149 | 77.0 | 31.8 | nil |
| 2016 | 210 | 37.9 | 7.4 | 2.4 |
| % change | +41 | -51 | -77 | - |
Ex-div: 18 Aug Payment: 23 Sep *Includes intangible assets of £125m, or 30.8p a share **Restated to account for company disposal during H12015 | ||||
