Ibstock interim profits pulped

Housing: Builder stays cautious on prospects despite rising profits and volumes as improved market fails to help brick-maker

The improving fortunes of the housing market failed to help Ibstock, Britain's biggest brick manufacturer, where persistently weak demand for housing bricks was compounded by a slump in fortunes at the company's Portuguese wood pulp businesses to send profits in the half-year to June into a tailspin.

Ibstock warned the full-year outcome would be "significantly" below the pounds 26.1m profit achieved in 1995.

The disappointing results, which saw interim profits collapse from pounds 14m to pounds 2.8m and the dividend held at 0.75p, wiped 7.5p, or 12 per cent, from the shares which closed at 57p.

The figures were the first since Ibstock acquired Redland's brick-making interests in April to become Britain's top brick manufacturer, ahead of Hanson, its nearest rival. After yesterday's fall, the shares are barely above the 55p at which the company pitched a two-for-three rights issue to fund the Redland deal.

Ian Maclellan, chief executive, said the slowdown in demand for bricks in the UK began in 1995 and had continued throughout the first six months of 1996. Ibstock's market share was held but lower sales volumes in the industry meant prices were slashed and the division's profits fell from pounds 6m to pounds 5.2m.

The main cause of the profits slump was a 44 per cent fall in the price of wood pulp during the half year, which saw the forest products division reverse a pounds 6.1m profits last year into a pounds 1.3m loss.