Britain’s two biggest brickmakers both saw a big jump in sales and profits last year on the back of investments and strong demand for UK-made products.
However both businesses – Ibstock and Forterra –warned of subdued trading in 2023 on the back of the cost-of-living crisis and a slowdown in the new housing market, at least in the first few months of the year.
Leicestershire-based Ibstock said sales last calendar year were up a quarter at £513 million, while pre-tax profits were up 61 per cent at £105 million.
The brick and concrete product business said acquisitions and investments in fast-growth construction markets had helped build growth. Meanwhile two new sites in Walsall were expected to come online by the end of 2023 with capacity to make more than 100 million bricks a year, for less than the current cost.
Ibstock chief executive Joe Hudson said: ““Revenue and profit were materially ahead of both the prior year and pre-pandemic levels, reflecting the strategic progress we have made over the last five years, with the development of a high quality, lower cost and highly efficient asset base allied to the strength of our market positions.
"We have faced into the challenges of recent years to emerge as a more diverse, higher quality business, with a strong management team and a clear strategy focused on value creation in the years ahead.
“As we face another period of uncertainty, we will draw on this experience to optimise our performance in the short term, while continuing to invest in, and diversify, the business to ensure we remain well placed to deliver on our medium-term targets.
"Activity in the early weeks of 2023 has continued to reflect the more subdued demand environment experienced towards the end of last year, although we anticipate this to improve as the year progresses.”
In its annual results, Northampton-based Forterra Plc said its sales were £455.5 million last year – also up a quarter on the previous year – while pre-tax profits were up almost 40 per cent at £70.6 million.
The business, which has just started production at Europe’s biggest brick factory in Desford, west Leicestershire, said it expected demand to fall by a fifth this year, mitigated to some extent by builders substituting imported bricks with UK-made ones. It said the spring new home selling season would be a “key determinant” of how it will do over the next few months.
Chief executive Stephen Harrison said they were pleased with the performance against a backdrop of “severe” cost inflation.
He said: “The short-term outlook for the UK housing market remains uncertain. We saw signs of softening demand towards the end of 2022, and this continued into 2023, partly driven by customer inventory reduction.
“Whilst we expect demand for our products to fall in 2023 relative to 2022, we are encouraged by falling mortgage rates and recent reports of improving reservation rates. We wait to see how our customers' spring new house selling season develops, as this will be a key determinant of demand in the current year.
“Against the continuing inflationary environment we have been able to implement further selling price increases at the beginning of 2023 and secure at least 80 per cent of this year's energy requirement.
“We remain confident that Forterra is well positioned to face these uncertain times. We began this year with minimal inventory, and are well practiced in managing our production capacity utilisation and cost base.
“With our new Desford factory now operational, we also expect to benefit from the industry-leading efficiency this will offer, manufacturing a range of products ideally suited to displace imported bricks.
“Alongside this, we possess a strong balance sheet with minimal debt and have recently extended our credit facility.
“Based on our assumption of a 20% fall in underlying demand relative to 2022, mitigated to some extent by the substitution of imported bricks, the board's expectations for the Group's 2023 performance remain unchanged.”
He added: “In the medium-term we continue to expect to benefit from the attractive UK market fundamentals of population growth, housing undersupply, a shortage of domestically-produced bricks and an increasing focus on the quality of housing stock.”
