(Alliance News) - Ibstock PLC on Wednesday said it expects earnings for 2020 to come in above company guidance, even with an anticipated drop in revenue.
The FTSE 250 brick manufacturer reported an improvement in market trends during the final quarter of 2020, allowing Ibstock to trade well with solid clay brick sales volumes and concrete sales volumes ahead of the year before.
Shares in Ibstock were up 7.0% at 210.51 pence on Thursday in London.
In addition, the group had implemented its remaining cost and capacity actions as part of the restructuring programme introduced in its first half results. Actions include the closure or mothballing of three clay factories and headcount reductions.
As a result of this, and the improvement in volume levels, this led to earnings before interest, tax, depreciation and amortisation margin for the final quarter of 2020 nearing the underlying levels reached for the same period the year before.
For the year as a whole, Ibstock expects adjusted Ebitda to be "modestly above" previous guidance set at GBP50 million. However, this still reflects a 59% fall from GBP122 million the year before.
In addition, despite the strong recovery in market conditions, the group achieved around GBP315 million in revenue for 2020, a 23% fall from GBP409 million in 2019.
For the first half of 2020, Ibstock's adjusted Ebitda fell by 84% to GBP10 million, on revenue that declined by 36% to GBP131 million, due to a halt in UK construction activities.
Looking ahead, Ibstock said that market fundamentals remain robust, with a structural deficit of housing, low interest rates and government policies being supportive of the construction sector.
Despite changes in the Help-to-Buy scheme and stamp duty rules, as well as continued pandemic uncertainty, the group said the strong momentum at the end of 2020 has given it a strong platform for progress in 2021.
"Having taken steps to protect and reshape our business, the group traded ahead of our expectations in the latter part of the year. While we are mindful of the ongoing uncertainties relating to Covid-19, we are encouraged by the continuing recovery of our markets through the end of 2020 and enter the new year in a strong position to capitalise on the opportunities in front of us," said Chief Executive Officer Joe Hudson.
Ibstock will publish its annual results on March 10.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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Ibstock (IBST)