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Ibstock moves out of US as it sells Glen-Gery brickmaking business for US$110mln

“We have concluded that opportunities to grow the US business are not in line with our overall strategic objectives, and the decision was taken to dispose of these assets and refocus the group on its core markets here in the UK”

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The new-build housing market in the UK remains strong, Ibstock said

Ibstock Plc (LON:IBST) has sold off its Glen-Gery US brickmaking business for US$110mln as it looks to concentrate more heavily on its home UK market.

Brickworks Limited is paying US$95mln in cash and is also taking on taking on US$15mln worth of pension liabilities and debts.

FTSE 250-listed Ibstock, which makes bricks and roof tiles, will use the cash to pay down some of its own debt, which should help to bring net debt down to £50mln by the end of the calendar year.

READ: Ibstock profits rise as new build demand offsets weather impacts

“We have concluded that opportunities to grow the US business are not in line with our overall strategic objectives, and the decision was taken to dispose of these assets and refocus the group on its core markets here in the UK,” said chief executive Joe Hudson.

“Following a competitive process, we believe that this is the best outcome for both Glen-Gery and Ibstock. This divestment augments our strong underlying cash flow generation, leaving us with a strong balance sheet.”

At the bottom of the statement was a brief trading update. Ibstock confirmed it is on track to deliver adjusted underlying earning of £121-125mln for the year to the end of December, despite the fact that it will miss out on a month’s worth of contribution from Glen-Gery.

It has also sold off some more surplus land for £3.7mln. Combined with a previous property sale, this should boost earnings by £9.5mln this year, although that is excluded from the above guidance.

Looking ahead, Ibstock noted the uncertainty around Brexit at the moment but reassured investors that the new-build housing sector remains strong.

Shares closed at 218.8p on Thursday afternoon.

Quick facts: Ibstock PLC

Price: 195.6 GBX

LSE:IBST
Market: LSE
Market Cap: £801.1 m
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