Ibstock PLC on Wednesday warned it expects a sharp decline in annual revenue for 2023, as the company scales back capacity temporarily in light of softer market conditions.

The Leicester, England-based maker of clay and concrete building products said it expects revenue in 2023 to have fallen 21% year-on-year to around £405 million from £513 million.

Shares in the FTSE 250-listed firm fell 3.4% to 138.20 pence on Wednesday morning in London.

It expects adjusted earnings before interest, tax, depreciation and amortisation to be in line with its previous expectations, crediting cost and capacity reduction initiatives.

In the final quarter of the year, Ibstock said it conducted a ‘comprehensive’ operational review, to align its cost base and capacity to its expected near-term demand. This resulted in reducing capacity across the business on a temporary basis, which included cutting its headcount. Additionally, Ibstock permanently closed its brick factory in South Holmwood, Surrey.

Ibstock expects the restructuring measures to save annualised costs of around £20 million, with £5 million of those to come in 2023.

‘Whilst taking this necessary action, we have been focused on preserving key skills and knowledge to ensure that the group retains the ability to build output back quickly when markets recover. As part of this review, we have also taken steps to integrate our core commercial and innovation capabilities, thereby sharpening our customer proposition and ensuring we go to market in a more aligned, coordinated way,’ Ibstock said.

In 2024, Ibstock expects residential construction markets to remain ‘subdued’ in the near-term, with some mild cost inflation to persist, which it will manage through pricing action.

It will release its full financial results for 2023 on March 6.

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