Slowdown in housebuilding hits Brickability’s top line
Sluggish housing market activity affected sales at construction materials group Brickability last year and could continue to impact the company’s growth in the year ahead.
In a trading update issued to the market this morning, the firm said revenue for its fiscal year ending 31 March 2024 was expected to be in the region of £594m, a 13 per cent decline year-on-year. On a like-for-like basis, excluding recent acquisitions, the company said revenue would be 18 per cent lower.
The revenue decline reflected “the lower levels of demand in Bricks and associated building products experienced in the first nine months of the year.”
The company said it would report earnings before interest, tax, depreciation and amortisation (EBITDA) of at least £44.8m for the year, which would be in line with previous guidance. Brickability said this reflected “operational resilience” and it expected to see margins “consistent with the prior year performance.”
The group added that, following the recent acquisitions of Group Topek Holdings Limited in October 2023 and TSL Assets Limited in January 2024, its leverage was steady at 1.25 times. Both deals have been performing in line with expectations and integrations have been “proceeding to plan.”
Brickability noted these deals have improved its position in the construction materials market and are expected to offset some of the underlying market weakness.
It said: “Despite activity levels in the sector remaining subdued, the board believes that with leading positions across a diverse portfolio offering, the group enters the new financial year well positioned to benefit materially from a recovery in its end markets.”
Over the past three years, the UK housebuilding market has been hit by higher interest rates, inflation and a lack of skilled labour. The number of completions by the major housebuilders, which control around half of the market, has slumped, with Persimmon being the latest builder to tell the market it would reduce the number of homes built this year.