1st Nov 2018 10:54
LONDON (Alliance News) - Masonry materials maker Forterra PLC said Thursday it expects annual profit to be marginally lower on a kiln shutdown, as current trading remained in line with expectations.
A recent overheating at the kiln of its Desford plant in Leicestershire - due to a "prolonged power outage - has led to the firm having to shut the kiln for around six weeks.
"After a detailed inspection, the company considers a full rebuild of the damaged sections of the kiln, rather than temporary repair ahead of the next planned shutdown, to be in the medium term the most prudent and cost-effective option," Forterra explained in a statement.
Operating profit for the full year is expected to be impact by between GBP2 million and GBP3 million. This is due to the impact of lost production, sales and the cost of repair.
Forterra, therefore, expects profit for 2018 to be "marginally" below its previous expectations.
In 2017, Forterra generated GBP64.5 million operating profit on revenue of GBP331.0 million. Pretax profit stood at GBP59.3 million.
Overall, however, trading during the four months ended October had been "in line" with expectations. This was "underpinned" by "good" levels of activity in the new built residential homes market.
Brick sales were "marginally" ahead of the year prior. Meanwhile, precast concrete sales have "improved as previously anticipated". Forterra is looking to improve concrete productivity despite the additional capacity added by its recently-acquired Bison Swadlincote facility in Derbyshire.
During the period, Forterra continued to generate "strong" levels of operating cash flow. Consequently, net debt fell to GBP56.1 million at the end of September from GBP60.8 million at the start of calendar 2018.
Shares in Forterra were 4.1% higher at 229.50 pence on Thursday.
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