Brickability Group shares slumped on Tuesday after the construction materials supplier warned profits would be towards the lower end of forecasts.
The Berkshire-based company’s share price was 11.65 per cent lower at 67.5p just after midday, making them one of the AIM All-Share Index’s worst performers.
Higher interest rates squeezing consumer incomes and stringent planning rules are continuing to stifle levels of new home developments, causing a knock-on effect for building products businesses.
Building struggles: Brickability shares slumped on Tuesday after the construction materials supplier warned profits would be at the bottom end of forecasts
Brickability noted market volumes for UK bricks fell considerably last year, with UK despatches about 30 per cent lower, while brick imports plummeted by around 42 per cent.
It said subdued demand for bricks and other building products is likely to persevere for the rest of the financial year ending March.
For that period, the group expects adjusted earnings before nasties to be towards the lower end of its £44.8million to £47.2million forecast range.
In addition, Brickability believes trading conditions will stay challenging for ‘longer than initially anticipated’, despite improving inflationary pressures and expectations of an interest rate cut.
But the firm said its contracting and distribution arms were performing strongly, with the former noting higher enquiry levels at its recently-acquired businesses Topek Holdings and TSL Assets.
Within the latter unit, Brickability expects the sustainable technology provider Upowa to benefit from greater demand for more zero-carbon products and regulatory changes regarding new-build housing.
Since June 2022, all newly-constructed homes in England must emit at least 30 per cent less carbon dioxide than previous standards; other new-builds like offices and shops need to reduce their CO2 emissions by 27 per cent.
The UK Government is also gradually tightening the minimum energy efficiency standards on non-domestic properties.
Currently, landlords can lease commercial properties with an Energy Performance Certificate (EPC) rating of E or above, but this will rise to a C grade in 2027 and a B rating in 2030.
Alan Simpson, chief executive of Brickability, said: ‘The short-term factors impacting our businesses are well publicised; however, we are very excited by some of the opportunities we are seeing in the market.
‘We continue to make further progress on 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 been CEO at Brickability since leading a management buyout of the company in 2016.
