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10 Mar 2021 | 08:19

Ibstock swings to loss amid pandemic

(Sharecast News) - Clay bricks and concrete products manufacturer Ibstock said on Wednesday that it swung to a full-year loss as demand was hit by the Covid-19 pandemic, but recommended a dividend. In the year to the end of December 2020, the company swung to a statutory pre-tax loss of £24m from a profit of £82m in 2019. Ibstock said this reflects a lower trading performance and exceptional costs of £36m related mainly to the pandemic and restructuring.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 57% of £52m, while revenue declined 23% to £316m. Revenues in the clay and concrete divisions fell 29% and 5% respectively.

Ibstock said the full-year results reflect the "significant" impact of Covid-19, with first-half revenues down 36% as many of its customers temporarily curtailed operations. In the second half, there was a "steady and sustained" recovery in demand, with revenues recovering from their April lows to reach 90% of 2019 levels in the final quarter of the year.

Ibstock said trading in the initial period of 2021 has been slightly ahead of the run rates achieved in the fourth quarter of 2020.

The demand backdrop and recent policy announcements are "encouraging", it said, but the group remains mindful of economic uncertainties and Covid-related disruption. As a result, Ibstock said it is comfortable with current market consensus expectations for adjusted EBITDA for the year of about £93m.

Ibstock said that in light of strong recent trading and cash generation, and after taking into account the prospects for the business, it is recommending a final ordinary dividend of 1.6p a share for 2020, down from 3.2p a year earlier.

Chief executive Joe Hudson said: "2020 was a testing year, as Covid-19 created some exceptional challenges for our business and our people.

"Looking further forward, market fundamentals remain supportive, underpinned by the UK housing deficit, Government policy and low interest rates. With a strong management team, clarity on the strategic drivers which will underpin our progress and continued recovery in our core markets, we believe that Ibstock is well placed to re-establish positive earnings momentum and deliver sustainable, profitable growth over the medium term."

At 0910 GMT, the shares were down 1.3% at 238.09p.

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