Brickability shares plunge following downbeat profit outlook

Brickability Group Shares fell on Tuesday after the building materials supplier warned that profits would be at the lower end of forecasts.

The Berkshire-based company’s share price was down 11.65 per cent to 67.5p shortly after midday, making it one of the worst performers on the AIM All-Share index.

Higher interest rates, which reduce consumer incomes, and strict planning rules continue to stifle levels of new housing development, with a knock-on effect for building products companies.

Brickability noted that UK brick market volumes fell sharply last year, with shipments to the UK around 30 per cent lower, while brick imports plummeted around 42 per cent.

He said weakening demand for bricks and other construction products was likely to persist through the rest of the financial year ending in March.

For that period, the group expects adjusted profits before unpleasantness to be at the lower end of its forecast range of £44.8m to £47.2m.

Additionally, Brickability believes trading conditions will remain difficult for “longer than initially anticipated”, despite improving inflationary pressures and expectations of an interest rate cut.

But the company said its sourcing and distribution arms were performing well, with the former noting increased levels of research at its recently acquired businesses Topek Holdings and TSL Assets.

Within the latter unit, Brickability expects sustainable technology provider Upowa to benefit from increased demand for more zero-carbon products and regulatory changes around new-build homes.

From June 2022, all new-build homes in England must emit at least 30 per cent less carbon dioxide than previous standards; Other new buildings, such as offices and shops, must reduce their CO2 emissions by 27 percent.

The UK government is also gradually tightening minimum energy efficiency standards in non-domestic properties.

Currently, landlords can let commercial properties with an Energy Performance Certificate (EPC) rating of E or higher, but this will increase to a C rating in 2027 and a B rating in 2030.

Alan Simpson, chief executive of Brickability, said: ‘The short-term factors affecting our businesses are well publicised; However, we are very excited about some of the opportunities we are seeing in the market.

“We continue to advance our strategy, which includes diversifying the group through differentiated product offerings and acquiring higher margin revenue streams, the benefits of which we are already seeing.”

Simpson announced his intention to retire last May, having served as CEO of Brickability since leading the company’s management buyout in 2016.