Shares in Ibstock have fallen by over 11% after the clay bricks and concrete products manufacturer stated that its second-half performance is to be "materially below" its previous expectations.

The firm said in its Q3 trading update that weak market conditions continued through September and October, and as a result, its clay division/brick sales were 22% below expectations.

In order to align output with lower demand and limit inventory build, Ibstock as reduced production in Q3 by approximately 20% against the plan set out at the half year.

This comes as industry data reported that UK brick market volumes declined by approximately 17% year-on-year across July and August. Against the backdrop, Ibstock’s domestic brick market share was consistent in Q3 year-on-year, while average selling prices to the market remained broadly in line with expectations.

The group said it has continued to implement cost reduction and cash management initiatives, focused primarily on overhead and discretionary expenditure. These measures will partially mitigate the impact of lower sales and production volumes.

The brick manufacturer said the combined impact of lower sales and the additional fixed-cost absorption impact of reduced production, partially offset by cost reduction measures, means the board now expects its second-half performance to be below its expectations.

Consequently, its full-year earnings are expected to be in the mid-£40m range.

In its outlook, Ibstock welcomed the introduction of the Your First Home support scheme announced in the recent Budget, stating that it is a "potentially meaningful intervention for the UK housing market". However, it added that its introduction in April 2027 is "disappointing" and has put additional pressure on near-term demand.

CEO at Ibstock, Joe Hudson, stated: "Trading conditions deteriorated sharply during the third quarter, with weakness continuing into October. We have responded by reducing production to manage inventory, taking further cost action and maintaining tight control of cash. These production decisions create an additional near-term earnings headwind but are necessary to align output with demand.

"We will continue to focus on cash generation and net debt reduction, alongside completing commissioning at Nostell and progressing opportunities to realise value from our asset base."

Russ Mould, investment director at AJ Bell, said that its guidance has been “smashed to pieces” by a "downtrodden" UK housebuilding market.

He concluded: "Inevitably, the company has responded by slashing production, but it has substantial fixed costs, and this only exacerbates the negative impact on its profit.

"Earnings were already heading in the wrong direction as far as the market’s concerned in the first half, and it looks like things are getting worse as the second half draws on.

"Understandably, Ibstock is battening down the hatches and focusing on cash generation to build up a buffer to get it through this difficult period. It will hope, like its customer base, that the property market picks up in 2027 but ultimately it has very little control over its trajectory."

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