The cuts will reduce Ibstock's capacity from 310 million bricks a year to about 260 million, in line with demand, which is expected to remain depressed this year and probably much of next. Ian Maclellan, group managing director, would not identify which plants would be closed, saying only that they would be the 'smallest and least profitable'. But he added that it intends to have just one factory in each of its five regions.
About 200 jobs from the workforce of 1,200 will be lost over the next 12 to 15 months. The cost of redundancies accounts for pounds 8m of a pounds 28m exceptional charge to be included in the 1992 accounts. A further pounds 4m relates to restructuring in the Portuguese wood-pulp business, also suffering from depressed prices, with the rest earmarked for plant and stock write- offs and other closure costs.
Ibstock is also writing pounds 15m off clay reserves at the sites that are being closed but this will be charged against the revaluation reserve in the balance sheet.
The group said profits for 1992, before the provisions, are expected to be pounds 1m, down from pounds 10.5m last time. Profits in the first half were pounds 3.1m, which means losses in the second half were about pounds 4m. But it intends to pay a 0.5p dividend, for a total of 1p, down from 6p last time. It added that the ratio of borrowings to shareholders' funds would be less than 20 per cent, despite the provisions. The shares closed down 2p at 45p.
This is the latest in a series of moves by brick manufacturers to address over-capacity in the industry. Stocks have reached 1.5 million, or six months' supply.Reuse content