(Alliance News) - Brick maker Ibstock PLC on Wednesday reported a drop in quarterly revenue due to subdued market conditions resulting from the Covid-19 pandemic and said that it will cut 375 jobs, or 15% of its workforce, as part of a cost cutting review.
The FTSE 250-listed company saw a sharp decline in sales volumes from late March due to the UK government imposed lockdown, with April volumes in Clay unit down 90% year-on-year. Volumes at concrete unit remained more resilient in April due to its exposure to infrastructure and repair, maintenance & improvement markets.
"As the construction and housebuilding sectors have begun to return to work over recent weeks, trading conditions have started to improve. We have seen a modest recovery in clay brick sales although volumes currently remain around 70% below the comparative period. Concrete volumes are now at around 50% of those from the same period in 2019," Ibstock said.
The FTSE 250-listed company overall saw a 10% year-on-year drop in revenue for the three months to March 31, with a decline of around 75% in the two months to May 31.
Ibstock said to ensure it remains well-positioned in the current crisis, it is conducting a review of all operations. The review is expected to lead to a "material reduction" in the company's fixed cost base, through job cuts, selective site closures, changes in operating patterns and changes to the size and structure of support functions.
In addition, the company also has deferred non-essential capital expenditure and tax payments to enhance financial position.
At May 31, the company's net debt stood at GBP105 million, primarily reflecting seasonal working capital movements early in the year. It, however, continues to have significant liquidity headroom within its GBP215 million revolving credit facility, which expires in March 2022.
Ibstock said: "Current trading conditions remain difficult but the combination of the cost reductions, restructuring measures and improved liquidity have strengthened the group's ability to meet current challenges and benefit from the eventual recovery in its core markets.
"As a result of current unprecedented levels of uncertainty, it is not possible to provide an accurate assessment of the trading outlook for the current year, and accordingly, guidance remains withdrawn".
Shares in Ibstock were down 1.1% at 198.31 pence each in London on Wednesday morning.
By Tapan Panchal; tapanpanchal@alliancenews.com
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Ibstock (IBST)