Everyone agrees that we are not building enough, but the imbalance between supply and demand is keeping the new-home market profitable for housebuilders. That's good news for brick maker Ibstock (IBST). First-half revenue grew in line with expectations (see table), reflecting a robust performance on home turf. The domestic business, which accounts for the lion’s share of group revenue, saw sales rise 8 per cent to £186m following strong volume growth. This translated into a 7 per cent rise in adjusted UK cash profit to £57m.
But there were pockets of weakness. In the UK, capacity constraints within soft mud bricks meant volume growth actually wasn’t as high as it could have been, while a general softening in the US market held back progress there.
Across the pond revenue grew by 11 per cent at actual exchange rates, although this was largely the result of a £5m foreign exchange tailwind. Exclude this and revenue actually fell, as did cash profit. US volumes also reported a mid-single-digit decline during the first half, which the company blamed on a market slowdown in the both multi-family and non-residential projects across the north-east and mid-west regions of the country.
Analysts at Peel Hunt expect pre-tax profit of £96m for the year ending December 2017, giving EPS of 18.3p, compared with £88.7m and 16.9p in 2016.
IBSTOCK (IBST) | ||||
ORD PRICE: | 239.8p | MARKET VALUE: | £975m | |
TOUCH: | 239.5-240p | 12-MONTH HIGH: | 261p | LOW: 157p |
DIVIDEND YIELD: | 3.3% | PE RATIO: | 11 | |
NET ASSET VALUE: | 96p* | NET DEBT: | 41% |
Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2016 | 210 | 37.9 | 7.4 | 2.4 |
2017 | 228 | 38.9 | 7.6 | 2.6 |
% change | +9 | +3 | +3 | +8 |
Ex-div: | 17 Aug | |||
Payment: | 22 Sep | |||
*Includes intangible assets of £120m, or 29p a share |