30th Jul 2018 08:41
LONDON (Alliance News) - Shares in brick and concrete products market Ibstock PLC slumped early Monday as the company warned production difficulties are expected to hit 2018 earnings.
Ibstock shares were trading at 245.40 pence each on Monday morning, 12% lower.
For the first half of 2018, Ibstock said it expects its adjusted earnings before interest, tax, depreciation, and amortisation to be around GBP58 million, down from the GBP59.7 million recorded a year prior.
This, Ibstock said, was due to the impact of weather during the first half as well as higher energy costs.
Further, the FTSE 250-listed company said its UK brick factories have been operating at either full or very nearly full capacity, but in recent months, especially July, production has missed expectations.
Ibstock said despite measures enacted to address this, second half 2018 production is now also expected to fall short of expectations. It is planning a year-long set of measures to meet increasing demand for bricks.
For 2018, Ibstock now expects adjusted Ebitda of between GBP121 million and GBP125 million, with the figure standing at GBP119.6 million in 2017.
However, Ibstock did say its dividend expectations are unchanged, with cash generation remaining strong boosted by property disposals. In 2017, Ibstock paid out 9.1 pence per share, up from 7.7p in 2016. Back in March, Ibstock had promised to pay a "supplementary" dividend alongside its 2018 interim dividend.
Ibstock said it will release its full interim results on Thursday next week.
Chief Executive Joe Hudson commented: "Demand in our UK brick markets is robust and the outlook for our UK Clay business remains encouraging, supported by the ongoing need for new housing. As market leader Ibstock is in a strong position to benefit from this positive backdrop.
"However, following my appointment as chief executive, the group has completed a review of its brick manufacturing assets which has identified a number of measures required to sustain the quality and range of our production output."
He added: "While the resulting additional maintenance shutdowns and extra spending on plant maintenance and refurbishment will have a short-term impact on our financial performance, we firmly believe it is the right thing to do for our customers and to maximise long-term value for shareholders."
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