Last checked at 16 Nov 2016 07:00
16 November 2016
Forterra plc
Trading update
Forterra plc, a leading UK producer of manufactured masonry products, provides this trading update covering the period from 1 July 2016 to 31 October 2016.
Trading in the period has been encouraging, with brick sales volumes running ahead of prior year in each month and now also on a year to date basis. The Group continues to see strong levels of activity from the major housebuilders and the excess inventory being carried by merchants is working through the supply chain, as expected. At the same time the level of brick imports has reduced. Based on this, operating profit for 2016 is anticipated to be in line with management's expectations.
The business continued to generate a strong level of operating cashflow, enabling net debt to be reduced further to £112.1m at 31 October 2016 after payment of the interim dividend of £4.0m (2.0 pence per share). Net debt to EBITDA (calculated with reference to the last twelve months of earnings before exceptionals up to June 2016) was 1.7 times at October 2016 compared with 2.2 times at IPO.
In line with its strategy of continuing to optimise its manufacturing footprint and adding incremental capacity through debottlenecking projects, the Board has recently approved capital expenditure of £6.5m at two of its brick facilities. At Desford, the project to increase gas capacity and install new kiln burners has commenced, with an estimated brick capacity increase of 10 million per annum. Capital expenditure has also been authorised to replace the old dryers at Claughton which will improve the efficiency of the production process and yield an additional volume of 5 million bricks per annum. The Claughton kiln was turned off in August 2016 as previously announced, and it is planned to carry out the work in the first half of 2017 in order to be in a position to relight the kiln in Summer 2017.
In October 2016, the Group completed the sale of its Structherm subsidiary in order to focus on improving and growing the core businesses of bricks, blocks and other concrete and clay building products. Structherm manufactures structural external wall insulation solutions for residential buildings, and recorded sales of £3.7m and EBITDA of £0.1m in 2015. Its net asset value at disposal (excluding cash) was £0.1m.
The Group launched its Sharesave scheme in October and was pleased with a strong participation rate of 62% from employees who elected to save up to £500 per month for a period of three years. The scheme has resulted in the grant of 4.7m options in the ordinary shares of the Company to these employees.
The Board continues to believe that the fundamentals driving demand for our products are attractive and is confident that Forterra's strategy will generate value for shareholders.
Enquiries
Forterra plc: | +44 (0) 1604 707 600 |
Stephen Harrison (CEO) |
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Shatish Dasani (CFO)
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FTI Consulting: | +44 (0) 20 3727 1340 |
Richard Mountain |
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Nick Hasell |
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Conference call
The Company will hold a conference call for analysts and investors at 8am today. To participate please dial +44 (0) 20 3139 4830, participant PIN code 59524169#. For replay please dial +44 (0) 20 3426 2807, PIN code 679317#.
Site visit
The senior management of Forterra are hosting a site visit for analysts and investors on Thursday 17 November at its Measham facility. No new financial information will be made available at this event.
Further information relating to the Company and its group can be found at www.forterraplc.co.uk