REG - Forterra plc - Trading Update

ForterraAnnouncement

25/01/2023 07:00

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RNS Number : 7358N  Forterra plc  25 January 2023

25 January 2023

FORTERRA PLC

Pre-close trading update

Strong 2022 result, well positioned to withstand continuing uncertainty

Forterra plc (the 'Group'), a leading UK manufacturer of essential clay and
concrete building products, provides this trading update for the year ended 31
December 2022.

Headlines:

·    Strong performance with FY22 result expected to be slightly ahead of
management's expectations and also above pre-pandemic comparators

 

·    Full year revenue c£450m (2021: £370.4m), c21% ahead of 2021

 

·    Full year sales volumes across our brick and block products were
broadly in line with 2021 with production capacity and low inventories the
primary constraint on sales for much of the year. Sales volumes in the final
quarter remained resilient although behind the 2021 comparator

 

·    Dynamic pricing model implemented to recover cost inflation with
cumulative brick selling price increases during 2022 of c50% with further
price increases delivered in January 2023

 

·    Strong performance by the Bison flooring business resulting in an
improved outturn from the Bespoke Products segment, with EBITDA before
overhead allocations almost doubling year on year

 

·    Continued strong operating cash generation with closing net debt of
less than £10m (excluding leases) after c£30m of strategic capital
expenditure and the £40m share buy back

 

·    Continued management of energy costs through forward purchasing with
over 70% of 2023 requirements now secured. Whilst we still expect a
significant increase in energy costs relative to 2022, in securing additional
volumes we have reduced our exposure to further volatility

 

·    Commissioning of the Desford brick factory ongoing with bricks now
being fired and the first sales anticipated in Q1 2023 following completion of
the necessary product certifications

 

·    The Group intends to issue its FY22 results announcement on 9 March
2023

 

 

 

Stephen Harrison, Chief Executive of Forterra plc commented:

"We are pleased with our strong performance in 2022 against a backdrop of
severe cost inflation.

"There is considerable uncertainty as to the outlook for the UK housing market
and accordingly demand for our products in the coming year. We did see signs
of softening demand towards the end of 2022 and we are waiting to see how our
customers' spring new house selling season develops as the outcome of this is
likely to be a key determinant of demand for our products during 2023.

"We remain confident that Forterra is well positioned to face this more
challenging environment. The UK brick industry is ideally placed to displace
imported products should demand fall, and with our new Desford factory we
expect to benefit from the industry-leading efficiency this will offer.
Alongside this, we retain a strong balance sheet with minimal debt.

"In the medium term we continue to expect to benefit from the attractive
long-term UK market fundamentals of population growth, housing undersupply, a
shortage of domestically-produced bricks and an increasing focus on the
quality of housing stock."

 

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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