Brickability Group Sees Positive Shift in Sentiment, Records 2% YoY Jump in Revenue

Highlights

• Brickability recently reported revenues exceeding £330 million, with a 2% year-on-year increase, though down 7% on a like-for-like basis due to market challenges.
• Solar PV sales doubled within the Upowa division, while the specialist cladding and fire remediation contracting businesses delivered a robust first half.
• Increased brick order intakes and rising inquiries for products indicate improving sentiment, with a potential recovery in the construction market expected in the current financial year.

Brickability Group plc (LSE:BRCK), a leading distributor and provider of specialist products to the UK construction industry, has released its trading update for the six-month period ending September 30, 2024. Despite ongoing challenges in the construction sector, the Group's diversified portfolio and strategic acquisitions have helped deliver solid results for the first half of the year.

Financial Performance Overview

In the first half of 2024, Brickability reported revenues exceeding £330 million, representing a 2% year-on-year increase. On a like-for-like basis, however, revenues were down 7%, reflecting the broader difficulties within the UK construction market, particularly in the new-build housing sector. This decline is consistent with trends highlighted in the Group’s earlier AGM statement.

Nevertheless, the Group remains resilient. The Distribution division returned to growth during the period, supported by a doubling in sales of solar photovoltaic (PV) products within its Upowa division. This reflects Brickability’s strategy to diversify its product offerings and capture growth in emerging sectors such as renewable energy solutions.

Sector Performance

• Bricks and Building Materials & Importing Divisions: Both these segments experienced lower revenues and volumes compared to the prior year. This mirrors the wider slowdown in new-build housing construction across the UK, a sector that has faced significant headwinds due to economic pressures and rising interest rates. However, the Group remains cautiously optimistic about a recovery in the second half of the year, with increased brick order intakes in recent weeks signaling a potential market rebound.
• Distribution: This division demonstrated resilience, returning to growth, driven by a surge in demand for solar PV products through Upowa. This reflects a growing trend in the adoption of renewable energy solutions in the construction industry, providing Brickability with an additional revenue stream.
• Specialist Cladding and Fire Remediation Contracting: Brickability’s acquisition of these specialist businesses has proven beneficial. The contracting division delivered a strong performance in the first half, particularly due to the timing of key projects. The Group anticipates this division's performance to be front-loaded, with its strongest results coming in the first half of the year.

Outlook and Market Sentiment

The new-build housing, residential, and commercial repair, maintenance, and improvement (RMI) markets remain subdued, but there are signs of optimism. Brickability has observed a positive shift in sentiment, driven by an increase in inquiries for its products and a more balanced order book for the second half of 2024. Leading industry indicators suggest that a recovery could begin within the current financial year, supported by improvements in brick orders and other key product categories.

Debt and Earnings

The Group's net debt as of September 30, 2024, is expected to be approximately £56 million on a pre-IFRS basis. This includes over £8 million in deferred and contingent consideration payments related to recent acquisitions.

Brickability expects to report adjusted EBITDA for the first half of at least £27.5 million, up from £25.6 million in the same period last year. This increase reflects the strength of the Group's diversified operations and its strategic acquisitions, which have helped offset some of the challenges in the wider construction market. Full-year expectations for EBITDA remain unchange