TIDMIBST
RNS Number : 7456O
Ibstock PLC
03 June 2020
Trading Update
Ibstock plc ('Ibstock' or the 'Group'), a leading manufacturer
of clay bricks and concrete products in the United Kingdom, today
issues a trading update for the five months ended 31 May 2020.
Trading performance
Sales volumes during the first 10 weeks of the year were, as
anticipated, modestly below the comparative period as we entered
2020 against the backdrop of more subdued market conditions. The
Group saw a sharp decline in sales volumes from late March as the
Government measures to control the Covid-19 pandemic began to take
effect and our construction and housebuilding customers closed
sites. During April, volumes in our Clay division fell by around
90% year on year, whilst exposure to infrastructure and RMI markets
meant that volumes in our Concrete division remained relatively
more resilient during that period.
As the construction and housebuilding sectors have begun to
return to work over recent weeks, trading conditions have started
to improve. We have seen a modest recovery in clay brick sales
although volumes currently remain around 70% below the comparative
period. Concrete volumes are now at around 50% of those from the
same period in 2019.
Overall, Group revenues for the three months to 31 March 2020
were down by approximately 10% compared to the comparative period,
with a decline of around 75% in the two months to 31 May 2020.
Operations
As announced on 15 May 2020, the Group has developed new working
practices and protocols which reflect the latest guidance from the
Government and public health authorities. This has allowed the
recommencement of production at approximately one third of our
manufacturing sites in response to customer demand. The Group will
keep demand levels under close review and is able to restart
production at further manufacturing sites over the coming months as
required.
The Group has taken significant action to address the challenges
presented by Covid-19. These measures have included utilising the
Government's Coronavirus Job Retention Scheme for a significant
portion of colleagues during the shutdown period, reducing
discretionary spend wherever possible and implementing a temporary
salary reduction for the Board and the executive leadership
team.
In addition, in order to ensure that the business remains
well-positioned as it emerges from the current crisis, we are
conducting a review of all operations. This review is expected to
lead to a material reduction in the Group's fixed cost base,
through selective site closures, changes in operating patterns and
changes to the size and structure of support functions. We have
entered into consultations with employees across the Group as part
of a series of restructuring proposals, with up to 375 positions,
representing around 15 per cent of the Group's total workforce,
potentially impacted as a result of these actions.
Whilst the changes anticipated will ensure our business is
adapted to the near-term industry demand outlook, we retain the
flexibility to scale production back up, as and when demand
recovers.
Financial position
In addition to actions taken to reduce costs, the Group is
continuing to prioritise liquidity and the preservation of cash to
enhance its financial resilience and flexibility in response to
Covid-19. In particular, this has included close management of
working capital and deferral of non-essential capital expenditure
and tax payments as allowed by Government schemes. As a result, net
debt at 31 May 2020 was approximately GBP105 million, primarily
reflecting seasonal working capital movements early in the year,
and the Group continues to have significant liquidity headroom
within its GBP215 million revolving credit facility ("RCF"), which
expires in March 2022.
To maintain financial flexibility, the Group has secured
agreement from its lending banks for a number of amendments to
covenant tests under the Group's RCF(1) . The Group is also pleased
to announce that it has been confirmed as eligible in principle to
access funding under the Covid Corporate Financing Facility
("CCFF"), subject to the Bank of England approving relevant
documentation.
Outlook
With the health and safety of our colleagues remaining our top
priority, the phased return to production is underway, to support
our customers and help the UK construction sector get building
again.
Current trading conditions remain difficult but the combination
of the cost reductions, restructuring measures and improved
liquidity have strengthened the Group's ability to meet current
challenges and benefit from the eventual recovery in its core
markets.
As a result of current unprecedented levels of uncertainty, it
is not possible to provide an accurate assessment of the trading
outlook for the current year, and accordingly, guidance remains
withdrawn.
(1) Existing covenants under the Group's RCF facility require:
leverage of no more than 3 times net debt to EBITDA; and interest
cover of no less than 4 times, tested bi-annually at each reporting
date.
The leverage test as at December 2020 will be replaced by a
liquidity test requiring the Group to have Minimum Liquidity of
GBP60 million. Liquidity defined as: (Cash and Equivalents) +
(Available Existing RCF Commitments) - (Any Outstanding Drawings
under the CCFF).
The interest cover test as at December 2020 will be amended to
no less than 1.25 times.
The leverage test as at 30 June 2021 will be amended to no more
than 3.75 times net debt to EBITDA.
Enquiries to:
Ibstock plc
Joe Hudson, CEO
Chris McLeish, CFO
Robert Coates, Investor Relations
Director 07880 486329
Citigate Dewe Rogerson 020 7638 9571
Kevin Smith
Nick Hayns
About Ibstock Plc
Ibstock plc is a leading manufacturer of clay bricks and a
diversified range of clay and concrete products, from its
operations in the United Kingdom. Its principal products are clay
bricks, brick components, concrete roof tiles, concrete substitutes
for stone masonry, concrete fencing and pre--stressed concrete
products.
The Group's two divisions are:
Ibstock Clay: The leading manufacturer by volume of clay bricks
sold in the United Kingdom. With 19 manufacturing sites Ibstock
Brick has the largest brick production capacity in the United
Kingdom. It operates a network of 23 active quarries located close
to its manufacturing plants. Ibstock Brick has recently
commissioned a new soft mud brick manufacturing plant in
Leicestershire that added approximately 100 million bricks to its
brick production capacity per annum. Ibstock Kevington provides
masonry and pre-fabricated component building solutions, operating
from 5 sites across the UK.
Ibstock Concrete: A leading manufacturer of concrete roofing,
walling, flooring and fencing products, along with lintels and
general concrete building products, with 16 manufacturing plants in
the United Kingdom.
Forward-looking statements
This announcement contains "forward-looking statements". These
forward-looking statements include all matters that are not
historical facts and include statements regarding the intentions,
beliefs or current expectations of the directors. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances that are difficult
to predict and outside of the Group's ability to control.
Forward-looking statements are not guarantees of future performance
and the actual results of the Group's operations. Forward-looking
statements speak only as of the date of such statements and, except
as required by applicable law, the Group undertakes no obligation
to update or revise publicly any forward-looking statements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTKLLFBBQLBBBF
(END) Dow Jones Newswires
June 03, 2020 02:00 ET (06:00 GMT)
Ibstock (LSE:IBST)
Historical Stock Chart
From Apr 2024 to May 2024
Ibstock (LSE:IBST)
Historical Stock Chart
From May 2023 to May 2024