- Ibstock kick-starts £30mn of buybacks
- Brokers upgrade earnings forecasts
Demand for bricks in the UK continues to be robust, with manufacturers and importers reporting better than expected results, although higher prices will eventually eat into demand as housebuilders' and renovators' spending power starts to run out.
Brickability (BRCK) said that following a “very strong” fourth quarter it expects revenue and adjusted cash profit to come in ahead of market assumptions, at £520mn and at least £38mn, respectively, for the year to March 31. Despite inflationary pressures, demand for UK housing and for building materials remains “robust”, the firm said.
Broker Cenkos Securities described the cash profit figure, a 117 per cent year-on-year increase, as a “colossal result”. It upped its 2023 earnings per share forecast by 4 per cent to 9.9p, giving it a forward price/earnings ratio of 10 times based on Thursday's 100p share price. Cenkos also increased its target price for the shares by 5p to 136p.
Meanwhile, Ibstock (IBST) said in a trading update ahead of its annual meeting that it is launching a £30mn buyback programme after a “strong” start to the year, with its board saying it expects its full-year result to be “modestly ahead” of previous expectations. Broker Peel Hunt increased its earnings per share forecast to 17.2p per share. Ibstock shares jumped by nearly 8 per cent in early Thursday trading. The company “appears to be coping well” with soaring input costs, Hargreaves Lansdown equity analyst Laura Hoy said.
“A focus on increasing capacity and efficiency at its factories has allowed it to jump on booming post-pandemic demand,” she added.
Shares in building materials companies have slipped in recent months as concerns have mounted about rising costs and the effect higher mortgage rates could have on the housing market. With cost of living increases also potentially putting the brakes on the home improvement market, we maintain our hold rating on both companies.
