Ibstock: The housing market recovery will ‘take time’ to generate stronger demand for materials

Early signs of stronger home construction volumes will not immediately translate into higher sales of building materials products, Ibstock warned.

The brickmaker noted ‘some early indications of an improvement’ in the number of new homes built during the three months ending in September.

Mortgage and inflation rates in Britain have normalized in recent months, giving the construction sector hope for a trading recovery.

However, Ibstock warned that it would ‘take time to feed through to sustainably stronger demand for our products’ due to the need to revitalize supply chains.

The Leicestershire-based company made the announcement as it revealed adjusted profits ahead of the nasties were ‘broadly in line’ with third quarter forecasts.

It also said sales volumes were comparable to those in the same period last year, while margins were supported by good cost and sales price management.

As a result, the FTSE 250 group has maintained the annual guidance it provided when publishing its half-year results in August.

Joe Hudson, CEO of Ibstock, said: ‘We have seen some early signs of a recovery in activity levels in the new-build housing markets, which should lead to sustainably stronger demand for our products in due course.

“Against this backdrop, we have made a number of carefully targeted investments to restore capacity for product lines in some parts of our core markets.”

Ibstock is ramping up production at its new Atlas clay brick factory, which is expected to produce 105 million bricks per year once it is running at full capacity.

In addition, the company expects the Nostell site near Wakefield, Yorkshire, to market approximately 50 million brick slips when fully operational.

During the general election campaign, the Labor Party pledged to build 1.5 million new properties over five years, partly by developing on lower quality ‘grey belt’ land and hiring more planning officers.

According to recent figures from the Office for National Statistics, just 183,610 new homes were built across Britain in the 12 months to March 2024, down 13 per cent on the previous year.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: ‘The new government’s focus on reforming the national planning framework and accelerating the delivery of new homes is a huge positive for the sector.

But he added: ‘How long it will take for the housing market to really come back to life is beyond Ibstock’s control and remains to be seen.’

Ibstock shares were 0.5 percent higher at 193.4p on Thursday morning, taking their gain over the past year to 43 percent.