IN Brief:
- UK brick market volumes declined by about 17% year on year in July and August 2026.
- Ibstock cut output by roughly 20% against its half-year plan as third-quarter clay sales missed expectations.
- The manufacturer expects 2026 adjusted EBITDA in the mid-£40m range while commissioning its Nostell façades factory.
Ibstock has reduced brick production by around 20% against its half-year plan after a further deterioration in demand across the UK construction market. The building products manufacturer reported that third-quarter sales in its clay division were 22% below expectations, with subdued trading continuing through September and October. It has also lowered its forecast for 2026 adjusted earnings as reduced factory utilisation adds to the effect of fewer sales.
Industry data showed UK brick market volumes down about 17% year on year across July and August. Ibstock’s domestic brick market share remained broadly unchanged in the third quarter, and average selling prices were in line with its expectations. The manufacturer consequently faced a sharp fall in the number of bricks sold into a weaker market, despite a stable share of that market and pricing close to its forecasts.
Ibstock reduced output to limit the build-up of unsold stock as brick orders weakened. Its clay manufacturing process uses substantial fixed plant, with preparation, forming, drying and kiln firing required before finished units can be dispatched. Reduced throughput spreads the costs of maintaining that production base across fewer bricks. The company expects this lower fixed-cost absorption to reduce adjusted earnings before interest, tax, depreciation and amortisation by about £6m, in addition to the effect of lower sales volumes.
The decision also changes the relationship between inventory and cash. Operating kilns and associated production lines at planned rates when demand is weak can leave money tied up in finished stock; cutting output reduces that exposure but leaves more of the fixed production cost unrecovered. Ibstock is tightening controls on capital expenditure, discretionary spending and inventory, and pursuing further cost reductions as it adjusts manufacturing to actual orders. The near-term earnings cost accompanies a deliberate attempt to conserve working capital.
The group now forecasts 2026 adjusted EBITDA in the mid-£40m range, below the guidance issued with its half-year results. Its August outlook had indicated a result towards the lower end of a company-compiled analyst consensus range of £59m–£68m. The revision reflects the combined effects of weaker sales and lower plant utilisation. The guidance is for adjusted EBITDA in the year ending 31 December 2026, a distinct measure from revenue and statutory operating profit.
In the first six months of 2026, Ibstock recorded revenue of roughly £164m, around 15% below the previous year, and adjusted EBITDA of approximately £26m, against £36m a year earlier. That weaker first half left the business relying on a recovery in building activity later in the year. September and October trading instead extended the decline, making the reduced third-quarter throughput and its £6m fixed-cost effect central to the revised full-year projection.
Chief executive Joe Hudson said trading conditions had deteriorated sharply in the third quarter and remained weak into October. He described reducing production and controlling cash as necessary responses to demand, while recognising that the production decisions themselves increase near-term earnings pressure. The approximately 20% production reduction is measured against plans drawn up at the half-year stage and is a response to lower orders and inventory requirements.
The company’s clay division is exposed to housebuilding schedules because masonry demand follows the construction of external walls and other specified brickwork. Orders can change as developers adjust site starts or build rates, while a manufacturer must plan kiln capacity and inventories ahead of shipment. The industry estimate of a 17% market contraction covers July and August, and Ibstock separately reported its own third-quarter sales against expectations. Those different measures show broad market weakness without equating two distinct reporting periods.
Ibstock also pointed to the government’s Your First Home initiative, whose planned April 2027 introduction places any prospective support for housing demand beyond the current financial year. The company has welcomed the initiative, but the timing of future orders will depend on actual housing starts and the building programmes that follow. Brick production cannot immediately regain its planned utilisation on the strength of policy expectations alone; sales volumes and dispatch schedules must recover first.
Alongside its response to the current market, Ibstock is progressing commissioning at a ceramic façades manufacturing facility at Nostell. The company expects commissioning to finish by the end of 2026 and says the factory will broaden its product portfolio, with financial returns building as volumes increase. It has also identified opportunities to realise value from strategic land assets, including those associated with calcined clay, as part of its plans to reduce net debt.
Factory throughput and cash management will remain closely linked while demand is subdued. The reduced production plan constrains further stock accumulation but brings the expected £6m fixed-cost absorption charge into the 2026 earnings picture. Ibstock’s next update will indicate whether clay sales have steadied, how much inventory has been reduced and whether commissioning at Nostell has progressed to the company’s year-end timetable.
