Investing.com — Shares of Ibstock (LSE:IBST) climbed 2% today, despite the company guiding a more conservative 2025 outlook than previously anticipated.
The UK-based brick manufacturer indicated that while its 2024 EBITDA is expected to be around £79 million, in line with prior forecasts, the initial guidance for 2025 suggests a lower-than-expected volume growth.
Ibstock’s management highlighted that the core Clay division maintained strong performance, although the Futures division faced some challenges, particularly in Glass Reinforced Concrete (GRC). The year-end net debt was reported to be approximately £122 million, aligning with the previously communicated range of £120-130 million.
For 2025, the company’s management has provided a positive first outlook, expecting market volumes to improve throughout the year. However, the anticipated volume growth of around 10% was revised to a more modest 5%. Despite this, mid-single-digit price inflation is expected to contribute to growth, along with a roughly 40% drop-through, despite potential operating inefficiencies due to capacity expansion outpacing demand.
Consequently, the management now deems a low £90 million EBITDA for 2025 to be reasonable, compared to the earlier estimates of £95-100 million. This revision implies that consensus forecasts may see downgrades in the high-single-digit percentage range, from the current £98.2 million.
Jefferies analysts commented on the update, stating, “With 2024 reported to be largely in line, the 2025 outlook is likely to be the key focus today. Given UK yield movements in early-2025, it comes as little surprise that management continues to expect volume growth this year but to a lesser extent than previously.
Although updated expectations suggest consensus may need to come down up to high-single-digits, we see this as largely reflected in the recent share price movements.”
Investors seemed to have anticipated the conservative outlook, as reflected in the recent share price movements, and appeared to respond to the confirmation of in-line performance for 2024 and the clarity provided for 2025.
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