23rd Nov 2018 08:22
(Correcting that Ibstock is a brick manufacturer and that it will receive USD95 million after the sale of Glen-Gery.)
LONDON (Alliance News) - Ibstock PLC on Friday said it remains on track to deliver annual earnings target as it sold its US brick manufacturing business, Glen-Gery.
The unit was disposed to Brickworks Ltd for an enterprise value of USD110 million, on a debt and cash free basis.
As part of the transaction, Brickworks will assume certain liabilities, including an associated pension liability. Ibstock expects to secure about USD95 million from the sale of Glen-Gery, with the transaction closing in the "coming days".
The brick manufacturer said it intends to use the received proceeds to repay debt. For 2018, Ibstock expects to report net debt of GBP50 million, down sharply from GBP114.0 million reported as at 2017-end.
"We have concluded that opportunities to grow the US business are not in line with our overall strategic objectives, and the decision was taken to dispose of these assets and refocus the group on its core markets here in the UK," said Ibstock Chief Executive Joe Hudson.
"Our capital allocation and shareholder return priorities remain unchanged, and we continue to assess both organic and inorganic investment options in the UK as we look to deliver long term growth," added Hudson.
In addition, Ibstock confirmed that its maintenance program in its UK brick business is progressing well.
The company said it remains on track to deliver adjusted earnings before interest, taxes, depreciation, and amortization between GBP121 million and GBP125 million for the year to the end of December. This includes full year contribution from Glen-Gery of GBP11 million.
In 2017, Ibstock reported adjusted Ebitda of GBP119.6 million.
"Whilst the uncertainty around the ongoing negotiations for the UK's withdrawal from the EU persists, the market backdrop in the new build housing sector remains positive," the company said in the statement.
Instock will provide a further trading update on January 17.
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