REG - Forterra plc - Trading Update

ForterraAnnouncement

22/11/2022 07:00

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RNS Number : 1299H  Forterra plc  22 November 2022

22 November 2022

FORTERRA PLC

Robust trading, FY22 expectations confirmed

Forterra plc (the 'Group'), a leading UK producer of manufactured masonry
products, provides this trading update for the ten-month period ended 31
October 2022 (the 'period').

Trading

·   Trading in the period has remained robust with YTD sales volumes in
line with prior year, reflecting ongoing production capacity constraints and
record low inventory levels.

·   Full year results are expected to be in line with management's
expectations.

·   Group revenue in the period was 23% ahead of the prior year driven by
selling price increases implemented on 1 January, 1 April and, most recently,
1 October when we raised the majority of our brick prices by a further 16.5%.
We continue to act decisively to recover ongoing cost inflation and we have
notified customers of further necessary price increases effective 1 January
2023.

·   We have secured almost 90% of our energy requirement for the remainder
of 2022. We have recently secured further 2023 positions and have now fixed
approximately 60% of our full year 2023 gas requirement, (increased from c45%
at the time of our last announcement) with Q1 currently c85% covered.

Strategic Investment

·   Commissioning of the new Desford brick factory is progressing with the
first bricks having been extruded and the first of the two kilns now lit. We
expect to be offering bricks from the new factory for sale to customers early
in 2023 with production ramping up throughout the year. Despite the widespread
inflationary pressures, we continue to expect to deliver the project within
the original £95m budget.

·   Our Wilnecote brick factory closed as planned at the end of September
to begin its £27m refurbishment and is expected to reopen in October 2023.
This investment will strengthen our position in the Commercial and
Specification market providing a degree of diversification beyond volume
housebuilding.

Capital Allocation and Balance Sheet

·   Our £40m share buyback programme was recently completed and resulted
in the repurchase of 15,843,807 shares leaving 212,803,389 shares in issue.

·   The Group retains a strong balance sheet with net debt before leases of
approximately £23m at the end of October.

CEO Succession

·   A separate announcement regarding the appointment of our new CEO has
been released this morning.

Stephen Harrison CEO commented:

"Trading remains robust although we are watchful of the impact of the recent
instability in financial markets and the reported negative impact this is
currently having on the housing market. The Group enters this uncertain time
in a position of strength having a strong balance sheet with low levels of
debt and high levels of cash generation. Inventories remain at record low
levels and despite the current uncertainties we remain well-placed to mitigate
the effects of a softening of demand by substituting imported bricks with
domestically manufactured product."

 

ENQUIRIES

Forterra plc +44 1604 707 600

Stephen Harrison, Chief Executive Officer

Ben Guyatt, Chief Financial Officer

FTI Consulting +44 203 727 1340

Richard Mountain / Nick Hasell

 

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