Lower output adds to earnings pressure
The Leicestershire-based company reduced third-quarter production by about 20% from the levels planned at the half-year stage. The cuts followed a worsening market: UK brick volumes were down 17% from a year earlier in July and August, and demand remained weak through September and October.
Chief executive Joe Hudson said conditions had deteriorated sharply in the third quarter. "We have responded by reducing production to manage inventory, taking further cost action and maintaining tight control of cash," he said.
Cutting output will also weigh on earnings. Ibstock estimates that lower fixed-cost absorption will reduce adjusted EBITDA by approximately £6 million, in addition to the impact of weaker sales volumes. Hudson said the production cuts were necessary to bring output into line with demand. Other savings and cash controls are concentrated on overhead and discretionary spending.
The new full-year outlook compares with analysts' previous consensus of £59 million. In its August 5 update, Ibstock had forecast adjusted EBITDA at the bottom of a company-compiled range of £59 million to £68 million, whose midpoint was £63.5 million.
Earnings had already weakened in the first half of 2026: adjusted EBITDA declined 28% to £26 million from £36 million a year earlier, while revenue fell 15% to £164 million. Despite the downturn, Ibstock said commissioning of its new ceramic façades factory at Nostell was still scheduled to finish by the end of 2026.
Housing support timing draws criticism
Ibstock welcomed the government's Your First Home scheme but criticized the wait until April 2027 for its introduction. The program is designed to help first-time buyers in England purchase newly built homes with a 2.5% deposit.
The company said the scheme could improve affordability, encourage demand for new homes and strengthen confidence in future housing supply. While it supported Ibstock's medium-term outlook, the company said the delay was adding pressure to near-term demand.
The warning followed a reduction in the Office for Budget Responsibility's housing forecast days earlier. It cut the number of new homes it expects to be built by 2031 by 190,000. Housing Secretary Angela Rayner has acknowledged only a "slim chance" of meeting the government's goal of 1.5 million new homes during the current Parliament, with estimates suggesting a shortfall of a third.
Brokers lower forecasts
Peel Hunt analysts Clyde Lewis and Sam Cullen said building companies exposed to the domestic market continued to face difficult conditions. They expected Your First Home to offer modest help next year but saw lower interest rates as central to a recovery in industry activity and share prices.
Peel Hunt retained its Buy recommendation on Ibstock while reducing its share-price target from 125 pence to 110 pence. It cut its 2026 EBITDA forecast by 25% to £44 million and lowered its 2027 estimate by around 33%.
The broker expects year-end net debt of approximately £145 million, implying leverage of around 3.5 times. Its forecasts exclude any potential upside from a possible calcined clay transaction.
Investec described the profit warning as "severe," saying the new EBITDA guidance was more than 25% below consensus expectations. The broker said it would not be surprised by a similar or larger reduction in expectations for fiscal 2027.
