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BlackRock has become the largest shareholder in the UK’s biggest brickmaker as it bets on a property sector rebound spurred by the Labour government’s plan to build 1.5mn homes over the next five years.
The giant US asset manager has increased its holdings in 125-year-old Leicestershire-based brick manufacturer Ibstock from less than 5 per cent at the beginning of March to almost 12 per cent, according to the latest regulatory filing.
One of the main BlackRock funds that increased its stake in the FTSE 250 company, which has a market capitalisation of £725mn, is the Throgmorton Trust.
In its half-year presentation, Throgmorton explained that a “period of political stability” ushered in by Labour’s landslide victory in July and “very favourable” housing policies in the party’s manifesto presented a strong outlook for brickmakers and housebuilders.
The Labour government has said it wants to increase the pace of house building across England through measures including planning reforms, mandatory targets and building on brownfield sites.
The UK has failed to meet its targets for house construction for decades. No government since Harold Wilson’s in the 1960s has reached the current implied target of 300,000 a year. In the year to March, the number of homes completed was 183,610, a 13 per cent fall on the previous year, while starts fell even more sharply, by roughly a fifth, to 162,340 — the lowest since 2014.
This decline has resulted in what Ibstock chief executive Joseph Hudson described as “extremely tough market conditions” at the company’s half-year results presentation in August.
Pre-tax profit fell 61 per cent to £11.8mn in the six months ending June 30, down from £29.9mn in the first half of 2023. Revenue was down 20 per cent to £178mn in the first half compared with the same period last year. Last year, revenue dropped 21 per cent from £513mn in 2022 to £406mn.
However, he expressed confidence in Ibstock’s longer-term prospects.
“We’re very supportive of the new government’s focus on accelerating the delivery of new housing and infrastructure, which is expected to form a more positive backdrop for the sector in the years ahead,” Hudson said.
The company’s share price rose 21 per cent in the three days leading up to and four days following the general election on July 4, reaching a year-to-date peak of 196.2p on July 16. It is currently trading at about 185p.
Peel Hunt construction analyst, Clyde Lewis, said the market had been encouraged by the new government’s plans.
“They’re investing ahead of a potential uplift in brick consumption from increased housebuilding.”
RBC Capital Markets analyst Benjamin Pfannes-Varrow said that the recovery of the housebuilding sector was “more a question of when than if” and that Ibstock was “well positioned for the turnaround”. RBC predicts revenues will grow 12.8 per cent in 2025 and 11 per cent in 2026.
BlackRock declined to comment.