Ibstock 2025: Small top-line lift, tighter margins, and big projects nearing the finish line
Ibstock has reported a mixed set of 2025 numbers: revenue nudged up 2% to £372 million, but profitability softened as pricing and mix went against them and the cost of reactivating capacity bit. The good news is the heavy lifting on capex is largely done, Atlas and Nostell are coming online, and management expects cash generation to accelerate from here.
Here’s what stood out to me – the positives, the wobbles, and what to watch into 2026.
Headline numbers investors need to know
| Metric (FY 2025) | Result | Prior year |
|---|---|---|
| Revenue | £372m | £366m |
| Adjusted EBITDA (earnings before interest, tax, depreciation, amortisation) | £71m | £79m |
| Adjusted EBITDA margin | 19.1% | 21.7% |
| Adjusted EPS | 5.7p | 7.7p |
| Statutory profit before tax | £1m | £21m |
| Total dividend per share | 3.0p | 4.0p |
| Adjusted free cash flow | £(10)m | £11m |
| ROCE (return on capital employed) | 5.8% | 7.5% |
| Net debt | £120m | £122m |
| Leverage (net debt/adj. EBITDA) | 2.0x | 1.8x |
Trading picture: strong H1 fizzled in H2
Brick market volumes improved year-on-year but remain well below the 2022 peak: 1.83 billion total units for 2025, up 6% on 2024 and still around 27% off the peak. Imports ticked up to 352 million (19% share). Within that backdrop, Ibstock did well to grow clay volumes by 8% and take share.
Pricing was “marginally down”, reflecting a shift towards wire-cut bricks (new-build skew) and softer demand in soft mud bricks tied to RMI (repair, maintenance and improvement) and specification-heavy work, particularly in the South East and London.
- Clay revenue rose 5% to £260 million; adjusted EBITDA of £68 million (down 6%), margin 26.2%.
- Concrete revenue fell 5% to £112 million; adjusted EBITDA of £9 million (down 37%), margin 8.3% as rail infrastructure and RMI stayed weak.
Management reactivated capacity early in the year to catch recovering demand, but as momentum faded in H2 that backfired a touch – extra costs landed while volumes flattened. They have since right-sized capacity and reduced headcount, targeting around £5 million of annualised savings from 2026.
Projects update: Atlas and Nostell are the strategic heart of the story
These two projects matter because they tilt Ibstock towards lower cost, higher efficiency, and new product adjacencies:
- Atlas – commissioning progressed well. Six of thirteen products are live, with the rest – including a carbon neutral range – due through 2026. Atlas aims to combine soft mud aesthetics with the consistency and efficiency of wire-cut production. It has been shortlisted for the government’s HAR2 hydrogen funding, and the rebuilt plant already cuts carbon by about 50% versus the original Atlas, with the potential to reach c.75% alongside a green hydrogen facility.
- Nostell – the automated brick slips line is commissioned; the larger ceramic facades line is in commissioning for 2026. Early customer response looks encouraging, including for the FastWall system. This is Ibstock’s push into diversified, design-led and MMC-friendly facades – a potential new growth leg.
Why it matters: with most of the big capex now spent, ramping these assets should add operational leverage as volumes return, while broadening the offer into higher-value, lower-carbon solutions.
Cash, debt and capital allocation: tightening the screws
Adjusted free cash flow came in at a £9.8 million outflow, with working capital building as inventories rose into weaker H2 demand and total capex held steady at £44.8 million (of which £24 million growth on Atlas/Nostell). Offsetting that, Ibstock realised around £30 million of cash proceeds from non-core disposals (surplus land and Forticrete roofing sites).
- Year-end net debt edged down to £120 million, with £105 million of available liquidity.
- Leverage at 2.0x remains within covenant headroom (limit 3.0x).
- RCF was refinanced at improved pricing and now runs to November 2029 (with an extension option); the £100 million private placement carries a fixed 2.19% coupon, maturing 2028-2033.
The dividend is trimmed to 3.0p (from 4.0p), a 53% pay-out on adjusted EPS. The capital allocation framework reiterates ordinary dividends at ~2x cover through the cycle, then growth or capital returns – with leverage targeted between 0.5x and 1.5x through the cycle. Land disposals could add a further £20–30 million over 3–5 years, and the calcined clay opportunity is moving towards a commercial agreement.
Exceptional items and one-offs: clearing the decks
Statutory profit before tax of £1 million reflects lower trading and a £19.5 million exceptional charge. This includes restructuring, site closure and decommissioning costs, closure of the GRC business, an impairment mainly at Leicester ahead of a temporary closure from April 2026, and the net loss on disposal of the roofing operation (partly offset by a Bedford sale-and-leaseback gain).
On the plus side, the Futures business trimmed its net costs to £2 million from £7 million the year before, showing better cost discipline as the pipeline builds.
Outlook 2026: soft first half, better second half if demand wakes up
Management expects H1 2026 to remain challenging after a weather-disrupted start. The plan is to actively manage production and inventory – which will pressure margins in-year but should help cash. Price increases in February 2026 are expected to offset cost inflation. Around 80% of energy needs are already secured for 2026, reducing a key risk.
Base case: modest year-on-year volume growth in H2 2026, contingent on demand firming in the spring and a gradual recovery in new-build and RMI. Geopolitical noise in the Middle East adds uncertainty, but the balance sheet is sound and the major capex is largely complete. If volumes return, free cash flow should accelerate and give optionality for growth and, in time, capital returns.
My take: cautious near term, building for a better cycle
What I like
- Share gains in clay with 8% volume growth in a tough market – evidence the core franchise is resilient.
- Atlas and Nostell are strategic upgrades that promise lower unit costs, more choice for customers and a cleaner product set.
- Capex roll-off plus land proceeds should swing cash flow positively when volumes normalise.
- Discipline on non-core disposals and a clearer focus on core clay and concrete.
What tempers enthusiasm
- Margins compressed – adjusted EBITDA down 10% and ROCE at 5.8% – with another margin headwind flagged for 2026 due to volume and inventory management.
- Concrete profitability is sensitive to rail and RMI, both currently subdued.
- Dividend cut to 3.0p reflects the cycle – sensible, but not exciting for income-focused holders.
Key things to watch in 2026
- Volume trajectory from late spring – does H2 deliver the “modest” growth management anticipates?
- Pricing vs inflation – can February price rises hold and fully cover input costs?
- Atlas ramp-up to all 13 products and early margin benefits; confirmation of any hydrogen funding support.
- Nostell facades commercial traction, especially FastWall and the broader IBrick range.
- Further land disposals, calcined clay commercial agreement, and any signals on future capital returns once leverage trends back towards the 0.5–1.5x target range through the cycle.
Bottom line
Ibstock has navigated a tougher second half by trimming capacity, finishing major upgrades and protecting liquidity. The near-term still looks choppy, but the investment case hangs on operational leverage as the cycle turns and on the growth credentials of Atlas, Nostell and calcined clay. If demand improves in H2 2026 as hoped, this set-up should translate into stronger free cash flow and, in time, more choices on growth and shareholder returns.
