Brickability Group – will we see signs of market recovery in the bricks sector? Tomorrow’s 2025 Finals will be well worth watching, shares now cheap at 61.80p, brokers TP 100p

14.07.2025

Tomorrow morning, Tuesday 15^th July, will see the Brickability Group (LON:BRCK) declare its results for the year to 31^st March – they could well be better than market expectations, but will its expectations be enough to build upon?

The Business

The £206m-capitalised group is a leading distributor and provider of specialist products and services to the UK construction industry.

Its business is made up of four divisions: Bricks and Building Materials, Importing, Distribution and Contracting.

With an agile, de-centralised, capital-light business model, supported by a strong balance sheet, Brickability leverages the skills of its people company-wide to effectively service the complex and evolving needs of the construction industry.

Founded in 1985, the group has grown organically through product diversification and geographic expansion, as well as through the acquisition of specialist businesses that support its long-term strategy for growth.

Today, the business encompasses a diverse portfolio of market-leading brands and a dedicated team of over 800 skilled professionals, led by a management team with deep-rooted knowledge and experience in the UK and European construction industries.

Pre-Close Trading Update

On Thursday, 24^th April, the group provided a pre-close Trading Update for the financial year to end-March 2025.

It reported that group revenue for that full year is expected to be some 7% higher at £637.0m (£594.1m).

That outturn reflects good momentum in trading throughout the second half of the financial year, notwithstanding subdued market conditions, and a strong final quarter in the group's Contracting Division where a number of projects, within its specialist cladding and fire remediation businesses, were delivered ahead of schedule and prior to the FY25 year-end.

The group stated that its adjusted EBITDA is expected to be ahead of market expectations at about £50.0m (£44.9m).

Management Comment

CEO Frank Hanna stated that:

"The well-diversified revenues and strong profitability delivered in FY25 see the Group move into FY26 with an increasingly healthy financial position, and a business that is built for material growth as our end markets recover.

In that regard, we believe that further reductions in UK interest rates would assist positive momentum in housing starts and the RMI market.

At the same time, the Board remains vigilant of ongoing volatility in global capital markets and any potential impact on UK housebuilding.

We look forward to providing further detail on our recent progress in our FY25 results."

The Equity

There are some 321m shares in issue.

The larger holders include Liontrust Investment Partners (9.80%), Otus Capital Management (4.73%), Canaccord Genuity Wealth (3.30%), Hanover Investors Management (3.13%), Amati Global Investors (2.74%), Quilter Cheviot (1.84%), BlackRock Investment Management (1.65%), Octopus Investments (1.60%), IQ EQ Fund Management (1.43%) and JM Finn & Co (1.32%).

Broker’s View

After the latest Trading Update, analyst Edward Stacey, at Cavendish Capital Markets, maintained his Buy rating on the group’s shares, with a Target Price of 100p.

The group’s strong finish to its end-March 2025 year, persuaded him to increase his estimates for the 2025 year to £637.0m revenues, while looking for adjusted pre-tax profits of £38.0m, generating earnings of 8.5p per share and more than double covering a 3.6p dividend payment.

The year now underway, to end-March 2026, sees the analyst expecting some £652.0m in sales, with £40.7m profits making 8.8p in earnings, and paying a 3.7p per share dividend.

Estimating even further ahead into the 2027 year, he looks for £701.0m sales, £45.2m profits, earnings of 9.8p and a 3.8p dividend per share.

His view was that:

“The positive update comes despite continued subdued demand in UK construction materials, and we believe that Brickability is well-positioned to deliver substantial earnings upside once demand recovery becomes established.

Our price 100p target reflects strong medium-term earnings upside, a strong balance sheet position, and an attractive dividend yield.”

My View

This group is a classic example of a ‘buy and build’ structure.

I like it and feel that its shares are currently undervalued at just 61.80p, I stick firmly and confidently to my 78p Target Price.

(Profile 16.04.20 @ 39p set a Target Price of 55p*)

(Profile 25.04.25 @ 64p set a Target Price of 78p)

Asterisk * denotes that Target Price has been achieved since profile publication.