Sales at UK's largest brickmaker Ibstock slump by more than a fifth as housebuilding downturn deepens

Sales at the UK's largest brickmaker, Ibstock, plunged by more than a fifth over the summer. The company criticised the government for not introducing fresh help for the housing sector faster.

Leicestershire-based Ibstock said on Monday that sales slumped by 22 percent below its expectations in the three months to the end of September, prompting it to slash production levels by a fifth.

Ibstock issued its second profit warning this year. The company said UK brick market volumes declined by 17 percent year on year in July and August, with weak market conditions continuing through September and October.

'Trading conditions deteriorated sharply during the third quarter, with weakness continuing into October,' said Joe Hudson, the chief executive of Ibstock. '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.'

The company now expects full-year profits to be 'materially below' previous expectations. Ibstock said profits are expected to be in the mid-£40m range, well down on analysts' previous consensus of £59m.

The warning comes days after the Office for Budget Responsibility cut its forecast for the number of new homes that will be built by 2031 by 190,000.

The housing secretary, Angela Rayner, has said there is only a 'slim chance' the government will meet its goal of building 1.5m new homes this parliament, amid estimates that the target could be missed by a third.

Shares in Ibstock fell as much as 13 percent on Monday, making it the biggest faller on the London stock market that day. The company's market value has halved over the last year to £277m.

Ibstock also criticised the government's decision to delay the start of the Your First Home support scheme, which is designed to help first-time buyers in England buy a newbuild home with a 2.5 percent deposit. The company said the scheme represents a welcome and potentially meaningful intervention for the UK housing market, but that the delay to its introduction until April 2027 is disappointing and has put additional pressure on near-term demand.

'Domestically exposed building stocks like Ibstock continue to face very challenging industry conditions,' said Clyde Lewis and Sam Cullen, analysts at Peel Hunt, in a note to investors. 'The new Your First Home programme should be modestly helpful next year but lower interest rates remain key to a pickup in sector activity and share prices.'