When Donald Trump won the US election, a top executive of one the UK’s largest brick makers texted a counterpart at Ibstock (IBST).
‘Are you loading up your wagons?’ the message read.
The joke, playing on Donald Trump’s promise to build a wall between the US and Mexico, was tongue in cheek. Even if Trump’s wall goes ahead, most of Ibstock’s operations in the US are in Pennsylvania, a north-eastern state far from the potential action.
ARE US SALES DECLINING?
Ahead of Trump’s inauguration later this week, Ibstock’s US business looks like it could do with a boost.
In the year to 31 December, sales gained 4% before currency movements or 18% including sterling’s decline against the dollar. After strong growth in the first half, the maths indicates Ibstock’s US sales might even have fallen in the second half of its financial year.
In the UK, which represents 80% of the Ibstock’s revenue, the brick manufacturer fared better. For the full year, Ibstock’s top line gained 2%. It may be entering 2017 with top line growth running at double that number, according to our calculations.
UPDATE BETTER-THAN-EXPECTED
Analysts at Davy say Ibstock’s update is better-than-expected on top-line growth and in line with management’s previous guidance and market forecasts on profit.
‘Other comments suggest the business is progressing in line with expectations in relation to items such as its capital investment projections, the reduction in net debt and 2017 selling price negotiations,’ write the investment bank’s analysts.
At the half-year stage, Ibstock’s net debt was 1.4 times its last 12 months’ earnings before interest, tax, depreciation and amortisation (EBITDA). Chief executive Wayne Sheppard said net debt fell further in the last six months.
Shares in Ibstock trade 1% lower at 184p.
TRADING OK AT MICHELMERSH
Michelmersh (MBH), Ibstock’s smaller rival, reported similar performance in the year to 31 December.
‘In October 2016, the group announced that it expected its financial performance for 2016 to be at or around a similar level to that reported for the full year 2015 and the board confirms that expectations,’ the company said in a statement today.
Michelmersh also said it would book gains in excess of £1m in its next financial year on a property transaction. Shares in Michelmersh are 1% lower at 49p.
LONE STAR SELLS FORTERRA SHARES
Elsewhere, the third of the UK’s three publically traded brickmakers Forterra (FORT) said Lone Star, the company’s former private equity owner, sold 23m shares in the company at 170p. That reduces Lone Star’s stake in the business to 53.5%. Forterra shares trade 3% lower at 174p.
Updates at Ibstock and Michelmersh are similar to those made by Forterra, the UK's second-largest brick maker, which said on 13 January second half trading was solid and activity picked up in the final two months of the year.
