Ibstock Reports Profit Decline Despite Revenue Growth in H1 2025
Why we think this is bad
The brick manufacturer's performance raises concerns. Despite a 9% revenue increase, profit before tax fell by 34.5% and EPS dropped by 36.4%. The adjusted EBITDA margin contracted from 21.2% to 18.4%, indicating significant pressure on profitability. Net debt has increased, and the company faces a competitive market backdrop with modest pricing progression. While management expects improvement in H2, the current headwinds and challenging market conditions cast doubt on this outlook. The maintained dividend offers little consolation given the substantial decline in key financial metrics.
Key Points
- Revenue up 9% to £193.4 million
- Profit before tax down 34.5% to £7.7 million
- Basic EPS decreased 36.4% to 1.4p
- Adjusted EBITDA margin contracted from 21.2% to 18.4%
- Net debt increased to £144.5 million
- Interim dividend maintained at 1.5p per share
- Full-year adjusted EBITDA guidance of £77-82 million
- Challenging market conditions and competitive pricing environment noted
- Expect profitability improvement in H2 2025
- Continued progress on strategic investments and sustainability initiatives
Summary
Ibstock Plc reported mixed results for H1 2025. Revenue increased by 9% to £193.4 million, driven by strong volume growth, particularly in the Clay division. However, profit before taxation decreased by 34.5% to £7.7 million, and basic EPS fell by 36.4% to 1.4p. The company's adjusted EBITDA margin contracted from 21.2% to 18.4%, reflecting higher costs associated with reactivating productive capacity and a competitive market backdrop. Net debt increased to £144.5 million from £121.6 million at the end of 2024. Despite these challenges, Ibstock maintained its interim dividend at 1.5p per share. Management expects profitability to improve in the second half of the year, targeting full-year adjusted EBITDA in the range of £77 million to £82 million. However, they acknowledge ongoing headwinds and challenging market conditions.