Ibstock bricks up hole in results

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The Independent Online
GREATER demand from housebuilders and rising prices across the range of its products helped Ibstock, Britain's third-largest brick maker, back into the black in the six months to June.

But Ian MacLellan, managing director, warned that, despite builders' complaints about increasing raw material prices, further rises were necessary to restore margins.

Flagging demand and over-supply caused a collapse in prices during the recession, and Ibstock fell to a pounds 27.6m loss in 1992 followed by an pounds 18.7m deficit last year.

Interim pre-tax profits were pounds 4.4m, compared with a pounds 17.1m loss in the first six months of 1993 when an pounds 18.7m charge was taken against the closure of a Portuguese paper mill. Earnings per share were 1.13p, compared with a loss of 4.93p, and the interim dividend was maintained at 0.5p.

A swing from a pounds 2.9m loss to a pounds 1m profit in forest products benefited from a surge in pulp prices from dollars 350 a tonne in 1992 to dollars 550, well above the division's break- even level of about dollars 430.

Mr MacLellan said that price rises of about 8 per cent for bricks this year would probably be followed by a similar rise next year. But the increases had only returned brick prices to pounds 120 per thousand compared with pounds 190 at the peak of the market in 1989.

In the core UK brick operation, profits rose from pounds 1.1m to pounds 3.9m. The brick industry's stock levels, which stood at six months' supply a year ago, have fallen to two months.

Greater demand in the north-east of the US helped the American brick division bounce from a pounds 509,000 loss to an pounds 826,000 profit. Much of the benefit was wiped out, however, by a swing from a pounds 424,000 profit in Portuguese building materials to a loss of pounds 287,000.