Cost of closing site will include £1.5m on redundancy payments
Weakening demand in the new build housing and RMI sectors sent income and profit down at brickmaker Ibstock in the first half with the firm planning to close one of its factories as a result.
It said the results were marginally ahead of expectations but revenue still fell 14% to £223m and pre-tax profit was down 42% to £30m in the six months to June.
The firm said it will shut its Ravenhead wire-cut brick factory near St Helens on Merseyside because of reduced demand. It said the cost of closing the site, one of 37 Ibstock operates, would be £11m including £1.5m of redundancy costs.
Chief executive Joe Hudson added: “We have seen a significant change in the UK macroeconomic outlook, with near-term expectations for both inflation and interest rates above the levels previously envisaged. Inevitably, this has created a more uncertain trading environment for customers in both our residential new build and RMI markets.
“As we have done previously during periods of challenging trading, we have taken decisive action to reduce costs across the business; this includes the difficult decision to propose the closure of our Ravenhead brick factory. We remain vigilant on costs and, as we have demonstrated in the recent past, will continue to take any further action necessary to ensure capacity is aligned with market demand, to protect the performance of the business.”
The firm, which said a bright spot was a 15% increase in revenue from its infrastructure business, is spending £50m on building a new plant in Nostell, West Yorkshire, to create an automated brick slip systems factory capable of producing up to 30 million brick slips a year from the end of next year.
The Nostell factory is part of its Ibstock Futures division, the new business aimed at growing revenue in the façade products and offsite and modular markets, which has now opened an innovation hub in the West Midlands and posted revenue of £6m in the first half.