Ibstock Earnings Warning Sends Shares Tumbling Over 10% After Builders Cut Back on Brick Orders

Ibstock has warned that annual earnings will come in at barely three quarters of previous expectations, sending its shares down more than 10 per cent on Monday after builders cut back on brick orders amid a sharp third-quarter slowdown.

In a trading update, the FTSE 250 brickmaker said it now expected full-year adjusted EBITDA in the mid-£40 million range.

Before the announcement, analysts' consensus estimates ranged from £59 million to £68 million, with the company having previously expected a result towards the lower end of that range. It said second-half performance would be materially below its earlier expectations.

Shares were changing hands at around 71p by mid-morning, down almost 12 per cent, compared with a previous close of about 80p, as investors reacted to the scale of the downgrade and weaker trading outlook.

Brick Orders Fall as Housing Demand Weakens

Ibstock's third-quarter clay and brick sales were 22 per cent below expectations, while UK brick market volumes fell by about 17 per cent year on year in July and August.

The company said its domestic market share was broadly unchanged year on year, indicating that the downturn reflected overall market conditions rather than a specific loss of customers.

The company said demand from housebuilders had softened as developers reassessed build rates and order patterns in response to slower reservation levels and ongoing affordability pressures in the housing market.

Some customers were reported to be running down existing inventories rather than placing new orders, which further reduced near-term volumes.

The update adds to concern about the UK construction sector. Ibstock said the Government's Your First Home support scheme could improve housing affordability and stimulate demand for new-build properties.

However, it described the decision to delay the scheme's introduction until April 2027 as disappointing, noting that greater clarity on policy support could help developers plan future projects and land pipelines with more confidence.

The company also highlighted that, while cost inflation had moderated compared with earlier in the cycle, energy and labour expenses remained elevated relative to pre-pandemic levels, putting additional pressure on margins at lower volumes.

Factory Activity Shows Pockets of Resilience

Separate figures showed more resilience elsewhere in UK industry. The manufacturing Purchasing Managers' Index, compiled by S&P Global, rose to 52.8 in October from 51.9 in September, its highest reading in five months. A reading above 50 indicates expansion.

The output component increased to 53.6 from 51.5, its strongest reading since September 2024. The survey pointed to firmer production in sectors such as machinery and transport equipment, partly offsetting weaker performance in construction-related manufacturing.

Rob Dobson, director at S&P Global Market Intelligence, said manufacturing employment growth had stalled after six months of expansion, as businesses faced rising staff costs and pressure from higher input prices.

Oil Majors Drag FTSE as Investors Eye BoE Move

The FTSE 100 was 0.4 per cent lower at the open. BP fell more than 2 per cent and Shell lost around 1 per cent in early trading, while Airtel Africa dropped 2.2 per cent.

Brent crude weakened to about $109 a barrel amid renewed hopes of diplomatic progress over the Iran conflict.

Iranian negotiators were discussing a proposal in Qatar that could help reopen the Strait of Hormuz, although the Associated Press reported that direct talks between Washington and Tehran were not taking place. Axios reported that President Donald Trump had paused consideration of further military strikes against Iran while diplomatic efforts continued.

Investors were also looking ahead to the Bank of England's next interest rate decision on Thursday, 5 November. Bank Rate stands at 3.75 per cent, and financial markets are anticipating the possibility of another increase as policymakers try to contain inflation without adding pressure to an already strained economy.

Any further tightening is being watched closely by housebuilders and suppliers such as Ibstock, given the impact of borrowing costs on mortgage rates and housing demand.