Last checked at 25 Jan 2023 07:00
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