UK Brickmaker Ibstock Sales Slump 22%

Ibstock, the UK's largest brickmaker, has reported a 22% slump in sales below expectations in the quarter to the end of September. This significant decline has prompted the company to issue its second profit warning this year and slash production levels by a fifth.

The sales slump is not an isolated incident, as the UK brick market volumes declined by 17% year on year in July and August. The weak market conditions have continued through September and October, leading Ibstock to take further cost action and maintain tight control of cash.

Ibstock's chief executive, Joe Hudson, stated that trading conditions deteriorated sharply during the third quarter, with weakness continuing into October. The company has responded by reducing production to manage inventory and align output with demand. However, these production decisions are expected to create an additional near-term earnings headwind.

The warning comes days after the Office for Budget Responsibility cut its forecast for the number of new homes that will be built by 2031 by 190,000. The UK government's goal is to build 1.5m new homes this parliament, but Housing Secretary Angela Rayner has admitted that there is only a slim chance of meeting this target.

Ibstock has criticized the government for not introducing fresh help for the housing sector faster, including the delayed introduction of the Your First Home support scheme until April 2027. The scheme is designed to help first-time buyers in England buy a new-build home with a 2.5% deposit.

## Why it matters The deepening housebuilding downturn in the UK has significant implications for the housing sector and the economy as a whole. The government's goal of building 1.5m new homes this parliament is at risk, and the delayed introduction of support schemes such as the Your First Home initiative may exacerbate the problem. Ibstock's sales slump and production cuts are a clear indication of the challenges facing the industry, and the company's criticism of the government's handling of the situation highlights the need for urgent action.

Ibstock now expects full-year profits to be in the mid-£40m range, which is materially below previous expectations. The company's shares plunged more than 8% following the announcement, reflecting the significant challenges facing the UK's largest brickmaker and the housing sector as a whole.