A strong year-end trading update form brick manufacturer Ibstock (IBST) helped it top the FTSE 350 leaderboard on Thursday, rising 8.2% to 213p.
The company lifted its guidance on earnings following cost cuts and ‘strong’ performance in the fourth quarter of the year.
For the 12 months to 31 December 2020, the company said it now expects to report adjusted earnings before interest, taxes, depreciation and amortisation, or EBITDA, ‘modestly above’ the previous guidance of £50 million.
Cash flow performance for the year was ‘materially’ ahead of expectations, with closing net debt of approximately £70 million, compared with £85 million as at 31 December 2019, and £103 million reported at 30 June 2020.
Cash flow benefited from both the improved trading conditions through the second half of 2020, and the decisive actions taken to manage cost and working capital throughout the period, the company said.
Looking ahead, Ibstock said market fundamentals for its products ‘remain robust, with a structural deficit of housing, low interest rates, and Government policy which is supportive of the role the construction sector will play in the UK economic recovery.’
Canaccord Genuity analyst Aynsley Lammin said: ‘The update confirms that the Group is entering 2021 in good shape with the cost base adjusted to the new scale of demand but able to flex up if volumes recover better than expected.
‘We expect that given the encouraging trends and with favourable supply and demand balance in the industry, price increases for 2021 should be sufficiently successful to cover cost inflation expected in 2021.’
Ibstock will publish its 2020 results in full on 10 March 2021.