Ibstock (LON:IBST) used its 2025 full-year results presentation to acknowledge a difficult trading backdrop, outline actions taken to manage costs and capacity, and describe how management expects cash generation to improve as major investment programs conclude and capital is released from non-core assets and land.
2025 performance: revenue up slightly, EBITDA lower
Chief executive Joe Hudson said 2025 “was a tough year,” with strong volume growth in the first half—driven mainly by new build residential demand—followed by progressively tougher conditions in the second half amid broader market uncertainty. Group revenue increased 2% to £372 million, while EBITDA was £71 million, in line with the guidance issued in the fourth quarter but down around 10% versus 2024.
Bedford noted that EBITDA margin improved in the second half to around 20% as incremental costs from bringing capacity back tapered and cost management actions took effect.
Divisions: clay resilient; concrete pressured by rail
In clay, revenue rose 5% to £260 million, supported by strong new build activity in the first half, with the second half flat year-over-year. Management described a more competitive pricing environment and a negative sales mix shift, which left average pricing slightly below the prior year.
Hudson and Bedford highlighted product mix differences within bricks: wire cut bricks performed better, reflecting new build demand, while soft mud bricks—more exposed to repair, maintenance and improvement (RMI) and specification-led work, and with greater exposure to London and the Southeast—were more muted.
In the question-and-answer session, Hudson said the industry mix was roughly 70% wire cut and 30% soft mud, and emphasized he did not view the shift as structural. He linked the softer soft-mud demand to a subdued RMI market and weak conditions in London and the Southeast.
Concrete revenue decreased 5% to £112 million (Bedford also referenced concrete revenue of £117 million earlier in the presentation), which management said was largely due to weakness in UK rail infrastructure markets constrained by rail spending control periods. Hudson said the company has leading positions in several concrete categories, including walling stone, fencing/building products, landscaping, flooring (which he said carries roughly 25% market share), and rail and infrastructure, which he characterized as high-margin but currently at historically low volumes.
Bedford said recent data points suggest rail activity is “turning,” and management expects some growth in 2026, albeit from a low base. He also reiterated that rail is a high-margin element within the concrete division, affecting mix and profitability when volumes are depressed.
Cash flow, balance sheet, and dividend
Bedford said inventory levels rose as demand weakened in the second half, resulting in a net working capital outflow of around £14 million. Capital expenditure was in line with the prior year, with £21 million on growth projects and about £24 million on sustaining spend.
With major projects nearing completion, management expects total 2026 CapEx to fall to around £25 million–£30 million. Hudson said investment projects at Atlas and Nostell are now “coming to their conclusion.” Atlas, described as the latest investment in the clay network, is expected to add 105 million bricks per year at full capacity.
The company also highlighted capital release actions. Hudson said Ibstock decided in Q4 to dispose of its Forticrete roofing sites and has completed a number of land disposals, releasing about £30 million of capital. Bedford added that proceeds from non-core disposals of around £30 million are treated as exceptional and therefore not included in adjusted free cash flow.
On leverage, Bedford said net debt ended the year at £120 million and leverage increased marginally to 2x. He said the group has £225 million of committed borrowings, comprising a £100 million private placement loan note and a £125 million revolving credit facility, which he said was refinanced in Q4 at improved terms. Based on covenant definitions, leverage at 31 December 2025 was 1.7x and the group had more than £100 million of available liquidity. The board recommended a final dividend of 1.5 pence, taking the total dividend to 3 pence, a payout ratio of 53% in line with the prior year.
Strategy and growth themes highlighted on the call
Hudson framed the company’s value creation approach around five strategic levers, including core market leadership, expanding into new sectors, product innovation, operational efficiencies, and unlocking value from land and clay reserves.
- Infrastructure and other sectors: Hudson said Ibstock is increasingly aligning with infrastructure, social and affordable housing, and mid- to high-rise buildings requiring cladding remediation. He cited the government’s 10-year infrastructure strategy and a £725 billion pipeline, and said additional product testing and assurance has been undertaken to enable supply into public-sector programs.
- New products and Nostell: Management highlighted FastWall and the ceramic facades facility at Nostell, which Hudson said will offer a wider architectural range and design flexibility. The company expects a ramp-up year in 2026 and said Futures’ EBITDA is expected to build from 2027 as Nostell begins to deliver returns.
- Operational excellence: Hudson said a multi-year operational excellence program is underway at a pilot factory at Aldridge, and management sees additional automation opportunities, particularly in concrete, described as relatively capital-light with quick payback.
- Land and reserves optionality: Hudson said Ibstock manages more than 2,700 acres of land across the UK. He highlighted three value routes: calcined clay commercialization (with commercial discussions with a preferred partner “well advanced” and an update expected at the half-year), continued land disposals (expected to generate £20 million–£30 million over the next 3–5 years), and land-based income streams such as quarry restoration through landfill generating about £2 million–£3 million per year.
2026 outlook: cautious near term, H2-weighted improvement
Hudson said 2026 began with weather impacts and that near-term demand remains challenging, with modest year-on-year volume growth expected in the second half of 2026. He said price increases implemented in February 2026 are expected to offset anticipated cost inflation for the year.
In Q&A, management said the industry moved more consistently on pricing this year, with “most of the industry” implementing increases on February 1, and Hudson said he was confident price rises could cover inflation. Bedford added that the company is about 80% hedged on energy, with hedging higher across the first three quarters and more exposure in Q4.
On production and inventory, Hudson said the company produced around 40 million–50 million more bricks than needed at the end of 2025 and will manage stocks carefully in 2026, without anticipating additional mothballing. He said this will create a margin headwind due to overhead recovery and more shutdowns, but should benefit overall cash flow. Bedford said 2026 EBITDA is expected to be weighted to the second half, with about 40%–45% in the first half.
Hudson reiterated management’s view that long-term housing fundamentals remain intact, though he said the company remains cautious in the near term and cited industry forecasts pointing to subdued conditions. He also said Ibstock believes it can respond quickly if demand returns, pointing to the ability to ramp active clay capacity by more than 20% with low-cost additions.
About Ibstock (LON:IBST)
Ibstock plc manufactures and sells clay and concrete building products and solutions to customers in the residential construction sector in the United Kingdom. The company offers bricks and masonry, which includes facing and engineering bricks, brick slips, special shaped bricks, walling stone, architectural masonry, prefabricated components, eco-habitats, and padstones and lintels, as well as façade systems; roofing products comprising roof tiles and accessories, and chimneys; and flooring and lintels, such as beam and block flooring, insulated flooring, hollowcore, and screed rails.
