(Adds details from the statement, background on the market)
April 22 (Reuters) - Ibstock plans to spend 60 million pounds ($83.55 million) to ramp up brick capacity in two of its sites as a recovery in the UK housing market has fuelled demand for the building material, the company said on Thursday.
The investment, which will be funded from its cash flow, in Atlas and Aldridge plants in the West Midlands will deliver a 115-million brick capacity and add 12 million pounds to core earnings per year once operational, Ibstock said.
Sales volumes in Ibstock’s clay business were ahead of internal expectations for the first quarter, whilst concrete volumes were in line, the company added.
The housing market in the UK has arguably showed the strongest rebound compared to other pandemic-hit sectors, including hospitality and travel, propped up by a record-low interest rate environment and desire for homes suited to home-working.
Taylor Wimpey, Britain’s third-largest homebuilder, earlier in the day forecast sustained demand due to the interest rate environment and other support measures.
As the market recovers, domestic demand for clay bricks will continue to exceed what is available from domestic manufacturing capacity, Ibstock said.
“With the market outlook now clearer, we are refocusing on growth,” Chief Executive Joe Hudson said.
A survey has also showed that a restart in postponed hospitality, leisure and office projects led to the British construction activity growing at its fastest pace since 2014 last month.
$1 = 0.7181 pounds Reporting by Muvija M and Aby Jose Koilparambil in Bengaluru; Editing by Shailesh Kuber