REG - Forterra plc - Trading update to the end of the October

ForterraAnnouncement

11/11/2024 07:00

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RNS Number : 5935L  Forterra plc  11 November 2024

11 November 2024

FORTERRA PLC

 

Trading update to the end of the October

 

Full year guidance maintained

 

Forterra plc (the 'Group'), a leading UK manufacturer of essential clay and
concrete building products, provides its trading update for the four-month
period ended 31 October 2024 (the 'Period').

 

Trading conditions remained challenging throughout the period. Brick
despatches were at similar levels to the prior year, although we have seen
improved demand for our concrete products.

 

Year to date revenues were 5% below the 2023 comparative. Against this, we
have maintained both our pricing discipline and robust cost control, leading
to an adjusted EBITDA in the period broadly in line with the Board's
expectations. Accordingly, the Board maintains its full year expectations for
adjusted EBITDA of around £50m.

 

We have continued to make progress with our strategic investment projects,
with commissioning underway and the first slips having been manufactured at
our £12m brick slip facility in Accrington. This cost-effective investment
will be the UK's first large-scale domestic brick slip manufacturing facility,
capable of producing 50m extruded brick slips per annum.

 

We continue to progress the refurbishment of our Wilnecote brick factory, with
commissioning expected to commence in the coming months. The factory will
resume production in 2025 following a two-year shutdown. Wilnecote will
provide an enhanced range of bricks for the premium commercial and
specification market and increase our exposure to this attractive segment.

 

The Group holds sufficient inventories to meet customer demand and can
increase output quickly and efficiently with minimal investment as market
dynamics improve. Demonstrating this, we have recently taken steps to increase
the output of some of our concrete products.

 

We anticipate modest levels of cost inflation heading into 2025, with the
recently announced increase in Employers' National Insurance contributions
adding to this. We have secured around 80% of our energy requirements for 2025
and also have good levels of coverage for 2026 and 2027.  In response to
these expected increases in our cost base we have announced selling price
increases for 2025 and we are currently in discussions with our customers. Our
ability to deliver these increases will be influenced by both market
conditions and the pricing strategies adopted by our competitors.

 

Looking ahead, we expect to benefit not only from Government policies that aim
to deliver a significant increase in housing supply, but also from improving
affordability as the benefits of reducing interest rates are felt. Our recent
£140m strategic investment programme, which provides us with 15% more brick
manufacturing capacity and improved efficiency relative to the last turn of
the cycle, leaves us ideally positioned to benefit from an improving market
outlook.

 

 

Neil Ash, Chief Executive of Forterra plc, commented:

 

"The Group has delivered a solid performance since June and, despite trading
conditions remaining challenging throughout the period, the Board maintains
its full year expectations for the year.

 

"Our strategic investments in Desford, Wilnecote and Accrington address
previous capacity constraints and provide us with improved efficiency relative
to the last turn of the cycle.

 

"Assuming a return to market conditions seen in 2022, the investment in new
capacity has created an enlarged Group capable of delivering EBITDA of
approximately £120m in the mid-term.

 

"The Board is encouraged by the new Government's policies that aim to deliver
a significant increase in housing supply, and also from improving
affordability as the benefits of reducing interest rates are felt. Overall, we
believe we are well positioned to benefit from an improving market outlook"

 

 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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