REG - Forterra plc - Full Year 2024 Trading Update

ForterraAnnouncement

23/01/2025 07:00

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RNS Number : 3617U  Forterra plc  23 January 2025

23 January 2025

FORTERRA PLC

 

Full Year 2024 Trading Update

 

Adjusted EBITDA in line with guidance, strong operating cash generation with
net debt better than expectations

 

Forterra plc (the 'Group'), a leading UK manufacturer of essential clay and
concrete building products, provides its trading update for the year ended 31
December 2024 ahead of its full year results which are scheduled for 12 March
2025.

 

Trading and Results

 

·    We saw a modest improvement in trading conditions in the final months
of 2024 with despatches remaining resilient in the run up to Christmas when
there is often a more pronounced slowdown

 

·    Full year revenue was in line with the prior year at c.£345m (2023:
£346.4m), with a double digit increase in H2 revenue relative to both the
prior year and H1 24. We benefited from volume gains in some of our concrete
products with brick volumes flat year on year. We have continued to maintain
pricing discipline with selling prices remaining relatively stable across our
product range

 

·    Adjusted EBITDA is expected to be around £50m (2023: £58.1m), in
line with our previous guidance

 

·    Department of Business and Trade figures highlight that UK brick
despatches in the 11 month period to November were 1% higher than the prior
year with despatches in the three months to November 18% ahead of the
corresponding period. Total UK brick consumption in 2024, inclusive of
imports, is still expected to be around 30% behind 2022 levels

 

·    We expect to report a strong improvement in our cash generation, with
an adjusted operating cash inflow in the region of £60m (2023: outflow of
£5.3m), reflecting both the benefit of our management actions to align output
with demand and continued disciplined cash management. We expect a
continuation of strong operating cash generation in 2025

 

·    As a result of the above, net debt before leases was lower than
expected at c.£85m, equating to leverage of c.1.9 times on a banking covenant
basis (June 2024: 2.3 times) and a c.£8m reduction on 2023 (£93.2m),
notwithstanding capital spend of over £20m on our strategic projects during
the year

 

Outlook

 

·    Whilst we now see signs of modest improvement in our markets, recent
heightened macro-economic uncertainty dictates that the timing and trajectory
of the recovery remains uncertain

 

·    We continue to take encouragement from the Government's ambition to
materially increase housebuilding but remain wary of the challenges in
delivering this. We look forward to the Government considering wider levers to
stimulate both supply and demand for new housing and in the short term we are
watchful as to any impacts arising from the changes to Stamp Duty on 1 April
2025 which will influence housing affordability

 

·    We continue to anticipate modest levels of cost inflation heading
into 2025, including Employers' National Insurance contributions as outlined
in the Autumn Budget. We have secured around 85% of our energy requirements
for 2025 and have good levels of coverage for 2026 and 2027. To mitigate cost
increases we have announced selling price increases for 2025 with customer
discussions continuing

 

·    The Group remains well placed to capitalise on a recovering market
with our £140m programme of strategic investment in our facilities at
Desford, Wilnecote and Accrington nearing completion and providing a 15%
increase in brick manufacturing capacity and improved efficiency relative to
the previous cycle

 

 

 ENQUIRIES

 Forterra plc                         +44 1604 707 600
 Neil Ash, Chief Executive Officer
 Ben Guyatt, Chief Financial Officer

 FTI Consulting                       +44 203 727 1340
 Richard Mountain / Nick Hasell

 

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