Brick maker to close plant as profits slump 58%

Ibstock Johnsen, the brick maker, is to cut at least one more plant by the year-end as part of the industry's efforts to bring supply in line with demand, writes Heather Connon.

Ian Maclellan, group managing director, said the group had closed two brickworks, and 'one definitely, another possibly' would go by the end of the year. He forecast production of 280 million bricks compared with a nominal capacity of 320 million.

The closures are the latest in a round of rationalisation for the industry, which has seen Redland take over Steetley - with significant capacity reductions - and Tarmac close several plants.

Mr Maclellan said the group had considered joint ventures or mergers but, because different factories had different products, 'it is difficult for us to find a combination that allows us to sell more bricks'.

He welcomed the industry's rationalisation, but said the 1.6 million bricks in stock - enough to build 150,000 houses, or a year's sales - meant that prices, which fell 10 per cent in the first half, were likely to remain under pressure. Operating profits from the brick business fell from pounds 6.7m to pounds 2.7m in the first half, contributing to a 58 per cent slump in pre- tax profits to pounds 3.1m for the group as a whole. The dividend is cut from 2.25p to 0.5p as earnings per share slipped from 1.97p to 0.76p. Mr Maclellan would give no hint on the likely level of the final, but said the group would not be happy to pay an uncovered dividend.

Losses in the forest products division, which sells pulp for paper manufacture, fell from pounds 586,000 to pounds 409,000, but Mr Maclellan said prices were likely to remain under pressure and the division was unlikely to return to profit this year.